Disaggregation, auditor conservatism and implied cost of equity capital: An international evidence from the GCC

Al‐Hadi, Ahmed; Taylor, Grantley; Hossain, Mahmud

doi:10.1016/j.mulfin.2014.11.005

Cited by 24 publications

(35 citation statements)

References 143 publications

(189 reference statements)

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“…Extant studies (e.g., Abu-Nassar & Rutherford, 1996) suggest that the annual report is the first priority source of information in emerging markets and hence investors can rely on this in their decision-making process. Furthermore, studies that investigate risk committee and/or market risk disclosures also collect relevant information from the annual report (e.g., Al-Hadi, Taylor, & Hossain, 2015;Al-Shammari et al, 2008;Tao and Hutchinson, 2013). Finally, IFC/Hawkamah (2008) reported that the annual reports of banks and listed firms in the GCC provide most of the information relating to corporate governance, corporate social responsibility, and management discussion.…”

Section: Notesmentioning

confidence: 99%

“…Third, prior studies (e.g., Li, 2010) document that IFRS improves the quality, reliability, transparency, and comparability of financial information and it improves the comparability of firm performance across countries. Al-Hadi et al (2015) also rely only on IFRS 7 (IFRS 7 and Basel II Pillar III) to develop the mandatory (voluntary) part of their MRD indices. 4.…”

Section: Notesmentioning

confidence: 99%

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Risk Committee, Firm Life Cycle, and Market Risk Disclosures

Al‐Hadi¹,

Hasan²,

Habib³

2015

Corporate Governance

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148

217

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Manuscript Type: EmpiricalResearch Question/Issue: This study investigates whether the existence of a separate risk committee and risk committee characteristics are associated with market risk disclosures. It also tests whether the role of a risk committee in affecting market risk disclosures varies for different firm life cycle stages. Research Findings/Insights: Using 677 firm-year observations of financial firms from Gulf Cooperation Council (GCC) countries during the years 2007-2011, we find that firms with a separate risk committee are associated with greater market risk disclosures, an effect that is more pronounced for mature-stage firms. Furthermore, findings suggest that risk committee qualifications and size have a significant positive impact on market risk disclosures. Theoretical/Academic Implications: This study complements the corporate governance literature by incorporating agency theory, legitimacy theory, stakeholder theory, and the resource-based theory to provide more robust evidence of the impact of a separate risk committee and the firm life cycle on market risk disclosures. Our results support the monitoring effect of a separate risk committee and suggest that a separate risk committee can improve "firm-level corporate governance" in the GCC countries characterized by a poor informational environment. Practitioner/Policy Implications: Findings from this study provide evidence that the existence, qualifications, and size of risk committees may be used as a channel to improve the disclosure level, suggesting a policy prescription for regulators and policymakers. Investors may also find these results useful in forming their own expectations about firm-level risk disclosures.

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Section: Notesmentioning

confidence: 99%

Section: Notesmentioning

confidence: 99%

Risk Committee, Firm Life Cycle, and Market Risk Disclosures

Al‐Hadi¹,

Hasan²,

Habib³

2015

Corporate Governance

Self Cite

148

217

View full text Add to dashboard Cite

show abstract

“…Overall, there is some evidence that the disclosure of risk information is important for enhancing firm value and maintaining shareholder relations in the GCC countries (Al‐Hadi et al. ) and that the regulatory authorities have stepped up their efforts to ensure that firms adequately disclose risk information (Hawkamah ).…”

Section: Gcc Institutional Setting and Mrdsmentioning

confidence: 99%

“…Al‐Hadi et al. (, ) find that the provision of market risk information reduces information asymmetry and decreases the costs of equity capital for GCC firms. Similarly, Moumen et al.…”

Section: Introductionmentioning

confidence: 99%

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

Al‐Hadi

Hasan

Taylor

et al. 2016

Financ Manag Account

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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.

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“…EMRD, mandatory market risk disclosures scaled by maximum expected score, which reflects the extent of disclosure; QMRD , mandatory market risk disclosures based on risk coverage , which measures the quality of disclosure; CG_Index , corporate governance index based on 15 attributes based on Al‐Hadi et al (); FEMALE_DIR , presence of female director on the board, otherwise 0; SIZE , natural logarithm of firm's market capitalization; LEV, leverage of the firm, measured as total short‐ and long‐term asset scaled by lagged total asset; BM , book value to market value ratio; ROA, return of asset; AUDIT , audit quality based on Big 4 audit firms; news, good news if firm has higher current earnings per share than last year; AGE , natural log of age of the firm, measured as the log of the difference between current year and year of establishment of the firm; FAMILY , presence of family director represents family ownership on the board; GOV, presence of government director represents government ownership on the board; MCAPDEV , market development, measured as total stock market capitalization of each country divided by total gross domestic products (GDP) in year t ; BoardS, natural logarithm of the board size; GOV_FAC, factor analysis of country investor protection index (which covers extent of director liability and ease of shareholders' suit directors and managers) and country level governance (which covers regulatory quality and control of corruption); SD, standard deviation.…”

Section: Resultsmentioning

confidence: 99%

Market Risk Disclosures and Board Gender Diversity in Gulf Cooperation Council (GCC) Firms

2017

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We investigate the impact of board gender diversity on corporate risk reporting for Gulf Cooperation Council (GCC) financial firms. Recent developments and improvements of corporate governance in the GCC markets suggest that firms in the GCC have become more transparent with less information asymmetry. However, we find that the presence of female directors in the boards of financial institutions suppresses the positive association between corporate governance and market risk disclosures for the period between 2007 and 2011. These findings suggest that culture and conservatism nature of GCC societies persist in the GCC business environment. Our results are robust to alternative specifications and endogeneity tests.

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Disaggregation, auditor conservatism and implied cost of equity capital: An international evidence from the GCC

Cited by 24 publications

References 143 publications

Risk Committee, Firm Life Cycle, and Market Risk Disclosures

Risk Committee, Firm Life Cycle, and Market Risk Disclosures

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

Market Risk Disclosures and Board Gender Diversity in Gulf Cooperation Council (GCC) Firms

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