The Effects of Corporation/Country Characteristics and the Level of Corporate Governance on Corporate Risk Disclosure: The Case of the Gulf Cooperative Council (GCC) Countries
43 Pages Posted: 5 May 2013 Last revised: 14 Jan 2019
Date Written: May 3, 2013
Abstract
This paper explores corporate risk disclosure (CRD) in the Gulf Cooperative Council (GCC) countries and its relation to different firm’s characteristics, level of corporate governance and country of origin. Employing content analysis we searched the 2008 annual reports of 424 GCC publicly listed firms for 45 types of CRD. Using univariate and multivariate analyses, we report a positive relation between CRD and the firm’s size, leverage, and number of years using IFRS. We also find that financial and non-Islamic financial institutions disclose more risks than other firms in the sample. Using the BASIC score, which is a corporate governance index developed by the National Investor (TNI) in collaboration with HAWKAMAH (The Institute of Corporate Governance in the UAE), we find a positive relation between the firm’s level of corporate governance and CRD. Interestingly, we document an increase in the level of CRD with more corporate communication and disclosure. Compared to prior literature (e.g. Dobler et al, 2011), our paper is unique because it is the first to explore the relation between CRD and IFRS, the difference in CRD between Islamic and conventional financial institutions, and most importantly, the impact of corporate governance and corporate communication on CRD.
Keywords: Corporate Risk Disclosure, Corporate Governance, IFRS, GCC
JEL Classification: G38, M40, M41
Suggested Citation: Suggested Citation