Market Risk Disclosures and Investment Efficiency: International Evidence from the Gulf Cooperation Council Financial Firms

45 Pages Posted: 6 Sep 2017

See all articles by Ahmed Al-Hadi

Ahmed Al-Hadi

Curtin University - School of Accounting; CBFS

Mostafa Monzur Hasan

Curtin University

Grantley Taylor

Curtin University - School of Accounting

Mahmud Hossain

King Fahd University of Petroleum & Minerals - Department of Accounting and MIS

Grant Richardson

Department of Accounting and Corporate Governance

Multiple version iconThere are 2 versions of this paper

Date Written: October 2017

Abstract

This study examines the association between market risk disclosures (MRDs) and the investment efficiency of financial firms from six emerging markets in the Gulf Cooperation Council (GCC) region. Based on a sample of 553 firm‐year observations over the 2007–2011 period, we find that MRDs are significantly and negatively associated with both under‐investment and over‐investment and that this association is more pronounced for larger firms. We also find that the association between MRDs and under‐investment is moderated during periods of economic distress such as the Global Financial Crisis of 2008 and that the association between MRDs and over‐investment is magnified during periods of reduced financial distress. Our results are consistent with the idea that MRDs reduce information asymmetry, which ultimately improves investment efficiency. We contribute to the literature in an emerging market context by providing empirical evidence on the association between MRDs and investment efficiency across six emerging GCC capital markets. This study also fills a gap in the literature by providing evidence on the factors affecting the investment efficiency of financial firms.

Suggested Citation

Al-Hadi, Ahmed and Hasan, Mostafa Monzur and Taylor, Grantley and Hossain, Mahmud and Richardson, Grant, Market Risk Disclosures and Investment Efficiency: International Evidence from the Gulf Cooperation Council Financial Firms (October 2017). Journal of International Financial Management & Accounting, Vol. 28, Issue 3, pp. 349-393, 2017, Available at SSRN: https://ssrn.com/abstract=3032186 or http://dx.doi.org/10.1111/jifm.12063

Ahmed Al-Hadi (Contact Author)

Curtin University - School of Accounting ( email )

Australia

CBFS ( email )

Ruwi, 112
Oman
98999651 (Phone)

Mostafa Monzur Hasan

Curtin University ( email )

Kent Street
Bentley
Perth, WA WA 6102
Australia

Grantley Taylor

Curtin University - School of Accounting ( email )

Australia

Mahmud Hossain

King Fahd University of Petroleum & Minerals - Department of Accounting and MIS ( email )

Department of Accounting and MIS
College of Industrial Management. KFUPM Box 5076
Dhahran, 31261
Saudi Arabia
+966 13 860 8496 (Phone)
+966 13 860 3489 (Fax)

HOME PAGE: http://www4.kfupm.edu.sa/cim/acct_mis.html

Grant Richardson

Department of Accounting and Corporate Governance ( email )

4 Eastern Road
North Ryde
New South Wales, NSW 2109
Australia

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