The Effect of Board Structure and Ownership Structure on Risk Disclosure Quality

Egyptian Accounting Review, Faculty of Commerce, Cairo University, Vol (6) , (2017)

44 Pages Posted: 10 Mar 2020

See all articles by Tamer Elshandidy

Tamer Elshandidy

Bradford University Management School

Mengyun Gan

affiliation not provided to SSRN

Date Written: December 1, 2017

Abstract

This paper examines how board structure (i.e., board size, board independence, and Chief Executive Officer (CEO) duality) and ownership structure (i.e., ownership concentration) influence risk disclosure quality (RDQ) of FTSE 100 non-financial firms. RDQ is captured by integrating five dimensions including Quantity, Depth_Quantitative, Depth_Qualitative, Future and Coverage of risk information. We find that firms with more independent directors on the board and those with less insider ownership are likely to provide considerably higher quality risk information than other firms. The strength of firms governance (based on board efficiency) is an important factor to consider so as to observe corporate governance factors’ effects. Specifically, we find that our previous results are predominantly driven by strongly rather than weakly governed firms. Our results also suggest that both board structure and ownership structure have similar (different) effects on risk disclosure quality to those observed on the quantitative and qualitative (quantitative, future and coverage) dimensions. The results can help regulators optimize risk report systems and encourage firms to provide high quality risk information so that investors can make better decisions.

Keywords: risk disclosure quality, board structure, ownership structure, strongly and weakly governed firms

JEL Classification: G14, G15, G39

Suggested Citation

Elshandidy, Tamer and Gan, Mengyun, The Effect of Board Structure and Ownership Structure on Risk Disclosure Quality (December 1, 2017). Egyptian Accounting Review, Faculty of Commerce, Cairo University, Vol (6) , (2017), Available at SSRN: https://ssrn.com/abstract=3537165 or http://dx.doi.org/10.2139/ssrn.3537165

Tamer Elshandidy (Contact Author)

Bradford University Management School ( email )

Bradford University Management School
Emm Lane
Bradford, BD9 4JL
United Kingdom

Mengyun Gan

affiliation not provided to SSRN

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