Market risk disclosures and corporate governance structure: Evidence from GCC financial firms

Ahmed Al-Hadi, Khamis Hamed Al-Yahyaee, Syed Mujahid Hussain, Grantley Taylor

Research output: Contribution to journalArticle

Abstract

In this study, we examine the relationship between corporate governance and the disclosure of market risk among financial firms from the Gulf Cooperation Council (GCC) region between 2007 and 2011. Using a comprehensive measure of the disclosure of market risk, our regression results suggest that the level of market risk disclosure is positively and significantly associated with the strength of a firm's corporate governance structure. Economically, the regression coefficient implies that a 3.25% increase in market risk disclosures is associated with a one standard deviation change in the strength of corporate governance. In addition, when we decompose our corporate governance index into its constituent items, we find that directors' independence and the dual roles of the CEO and chairman of the board reduce the extent and quality of market risk disclosures. Our results are robust to alternative specifications and endogeneity tests.

Original languageEnglish
JournalQuarterly Review of Economics and Finance
DOIs
Publication statusAccepted/In press - Jan 1 2017

Fingerprint

Risk disclosure
Market risk
Corporate governance
Gulf Cooperation Council
Governance structure
Disclosure
Chairmen
Chief executive officer
Coefficients
Endogeneity
Standard deviation
Governance indexes
Director independence

Keywords

  • Corporate governance
  • GCC
  • Market risk disclosures

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

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