A developing country's commercial banking risk governance disclosures: Post‐financial crisis

Abstract

Risk governance disclosures (RGDs) provide users with valuable information and greater corporate insights about the management, oversight and strategic direction of the organisation. However, insufficient research has been conducted in this area. RGDs reduce information asymmetry and increase transparency. This study examines the level of RGDs in the commercial banks (CBs) of a developing country where most RGDs are voluntary and made at management's discretion. The study adopted a quantitative, multi-method approach. RGDs for two publicly listed CBs in Barbados were analysed over 10 years (2007-2016) using a risk governance disclosure index (RGDI). Correlations were also used to determine if a relationship existed between the disclosures and performance. Disclosures were found to be general and nonstandardized. Company-specific disclosures were infrequent, and annual disclosures were repetitive and symbolic. No significant relationships were discovered between corporate governance disclosures and performance. However, but bank performance indicators were found to be positively related to risk disclosures. A limitation of the study is that only two of the six CBs reported in a manner suitable for this study. Hence, reducing the number of observations. This was overcome through the use of a longitudinal approach which allowed for improved understanding of RG reporting practices in this sector. The results provide valuable insights which supplement the existing literature.They also provide pertinent information for standard-setters, regulators and preparers of the reports. The study contributes to the existing literature in that it examines the disclosure behaviours of CBs in a non-traditional governance model in an economy with limited research.

The impact of justified corporate governance changes against exchange rate exposure in North Cyprus

“…Focusing on impact of disclosing information or performance measures regarding internal governance matters more on company performance Weekes‐Marshall (2020) explained use of disclosing governance information so called ‘Risk Governance Disclosures (RGDs) and construction of the RGDI index’ determined the relationship between information released and performance, however, there was no significant positive association between but positively associated with work measurements used. It could be deduced that, implemented right standards of performance measurements in the organisation were more influential than information disclosed and banks releasing good information of financial statements do not mean a success in governance unless performance of the management is at its potential keeping everyone happy inside and outside the organisation.…”

Pillar 3: Does banking regulation support stakeholders’ interest in banks financial and risk profile?

“…First of all, there is a lack of standardization of the disclosures, which is important due to its impact on the banks’ performance indicators. Disclosures were found general, providing no further useful information, infrequent, annual disclosures were repetitive and symbolic [ 11 ], there is an imbalance among some disclosure categories and lack of standardization due to data scarcity [ 12 ]. Furthermore, disclosures in their prescriptive nature do not provide an adequate risk picture as they are predominantly backwards-looking.…”