The extent of corporate governance disclosure and its determinants in a developing market: The case of Egypt

Abstract

The aim of this paper is to assess the extent of corporate governance voluntary disclosure and the impact of a comprehensive set of corporate governance attributes (board composition, board size, CEO duality, director ownership, block-holder ownership and the existence of audit committee) on the extent of corporate governance voluntary disclosure in Egypt. The measurement of disclosure is based on published data created from a checklist developed by the United Nations, which was gathered from a manual review of financial statements and websites of a sample of Egyptian companies listed on Egyptian Stock Exchange (EGX). Although the levels of CG disclosure are found to be minimal, however disclosure is high for items that are mandatory under the Egyptian Accounting Standards (EASs).The failure of companies to disclose such information clearly shows some ineffectiveness and inadequacy in the regulatory framework in Egypt.Moreover, the phenomenon of non-compliance may also be attributed to the socio-economic factors in Egypt. Therefore, it is expected that Egyptian firms will take a long time to appraise the payback of increased CG disclosure. The findings indicate that that -ceteris paribus -the extent of CG disclosure: (1) is lower for companies with duality in position and higher ownership concentration as measured by block-holder ownership;and (2)

Factors affecting financial instruments disclosure in emerging economies: the case of Jordan

“…This proposition is explained in terms of positive accounting theory where modern companies are characterized by a separation of ownership and control. This arrangement for corporate control generates agency costs resulting from the conflicting interests between (i) management and owners, and (ii) across different classes of owners (Al-Moataz and Hussainey, 2010;Samaha et al, 2012;Klai and Omr, 2011;Ho et al, 2013). In other words, the greater the percentage of stocks owned by top managers, the more likely it is that they make decisions consistent with maximizing a company's wealth and providing transparent financial statements in order to optimise the current share price (Mak and Li, 2001).…”

“…In particular, boards with a higher proportion of outside or independent directors will increase the monitoring of management because they are not affiliated to any internal parties from the company (Weir and Laing, 2003;Chau and Leung, 2006;Klai and Omr, 2011;Ho et al, 2013). Prior studies have also found that the presence of independent directors on boards may improve the quality of financial statements and corporate disclosures (Chen and Jaggi, 2000;Xie et al, 2001;Cheng and Courtenay, 2004;(Samaha et al, 2012;Al-Moataz and Hussainey, 2010;. For example, Mak and Li (2001) examined the determinants and interrelationships among corporate ownership characteristics and boards of directors using a sample of Singaporean listed firms.…”

“…The proportion of outside directors was negatively related to managerial ownership, board size and government ownership. In terms of corporate governance, firm characteristics and levels of corporate disclosure, Samaha et al (2012) assessed the impact of corporate governance attributes (board composition, board size, CEO duality, director ownership, block-holder ownership and the existence of audit committee) on the extent of corporate disclosure using a sample of Egyptian listed companies. They found that the level of corporate disclosure is lower for companies with a dual CEO and higher ownership concentration as measured by block-holder ownership;…”

Corporate Boards and Ownership Structure as Antecedents of Corporate Governance Disclosure in Saudi Arabian Publicly Listed Corporations

“…Generally, and notwithstanding the increasing number of CG Codes in developing countries, such as Saudi Arabia (Aguilera & Cuervo-Cazurra, 2009;Samaha et al, 2012), existing studies investigating the effectiveness of voluntary CG Codes in improving governance standards are disproportionately concentrated in a few developed countries (Bebenroth, 2005;Bozec & Bozec, 2007;Cromme, 2005;Hooghiemstra, 2012;Hussainey & Al-Najjar, 2012;Mallin & Ow-Yong, 2012;Pass, 2006;Pellens, Hillebrandt, & Ulmer, 2001;Salterio et al, 2013;Werder et al, 2005). It is contended, however, that in developing countries with different cultural, regulatory, CG, and institutional contexts, such as Saudi Arabia (Aguilera & Cuervo-Cazurra, 2009), voluntary compliance with CG Codes can be expected to vary from what has been found in developed countries.…”

“…existing studies that empirically examine the different extent to which a firm's board and ownership mechanisms can serve as strong or weak antecedents of voluntary compliance and disclosure of good CG practices are generally rare (Bozec & Bozec, 2007;Collett & Hrasky, 2005;Hussainey & Al-Najjar, 2012;Mallin & Ow-Yong, 2012;Salterio et al, 2013), but particularly acute in developing countries (Ntim, Opong, Danbolt, & Thomas, 2012;Rouf, 2011;Samaha et al, 2012;Tsamenyi et al, 2007). This intuition is motivated by the fact that the capacity of CG codes to achieve good governance depends largely on the extent to which senior managers, owners, and companies are willing to engage in effective voluntary compliance and disclosure (Core, 2001;Ntim et al, 2013;Tariq & Abbas, 2013).…”