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The Impact of Corporate-and Country-level Governance Mechanisms on the Firm's Disclosure Quality: Evidence from MENA Countries

Ibrahim O.A Eriqat|Suhaib Al-Khazaleh
사람과세계경영학회 (People&Global Business Association)|2023.12|Global Business and Finance Review|제28권 제7호|pp. 122-137|DOI 10.17549/gbfr.2023.28.7.122

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참고문헌

키워드

Corporate GovernanceMENADiscourse QualityCountry-Level Governance

초록

Purpose: The paper aims to investigate the impact of corporate and country-level governance mechanisms on the firm's disclosure quality. Design/methodology/approach: The paper employs a panel dataset comprising 96 financial institutions listed on the stock markets of four countries in the MENA region: Palestine, Jordan, Kuwait, and Qatar. This dataset spans five years, from 2016 to 2020. Data primarily originate from the annual reports of these institutions and are subjected to analysis through pooled OLS, fixed effect (FE), and random effect (RE) methodologies. Findings: The main findings of this study reveal that corporate governance (CG) factors, including board size, board meetings, and audit committee size, have a positive impact on disclosure quality. Additionally, concerning country-level governance, the role of law positively influences disclosure quality, whereas political stability and corruption negatively influence disclosure quality. Research limitations/implications: This study's main limitations are missing data, especially regarding the audit committee information, and the lack of a database covering the firms in the MENA region. The findings can help managers, policymakers, and other stakeholders enhance the firm's disclosure by adopting good corporate and country- level governance practices. Originality/value: The study develops a disclosure quality index that examines various disclosure requirements attributes, encompassing financial and non-financial disclosure aspects. Such an index adds value to prior research on disclosure quality. Additionally, this study expands the scope of previous research by incorporating wide aspects of CG attributes and investigating the role of country-level governance.

Abstract

Purpose: The paper aims to investigate the impact of corporate and country-level governance mechanisms on the firm's disclosure quality. Design/methodology/approach: The paper employs a panel dataset comprising 96 financial institutions listed on the stock markets of four countries in the MENA region: Palestine, Jordan, Kuwait, and Qatar. This dataset spans five years, from 2016 to 2020. Data primarily originate from the annual reports of these institutions and are subjected to analysis through pooled OLS, fixed effect (FE), and random effect (RE) methodologies. Findings: The main findings of this study reveal that corporate governance (CG) factors, including board size, board meetings, and audit committee size, have a positive impact on disclosure quality. Additionally, concerning country-level governance, the role of law positively influences disclosure quality, whereas political stability and corruption negatively influence disclosure quality. Research limitations/implications: This study's main limitations are missing data, especially regarding the audit committee information, and the lack of a database covering the firms in the MENA region. The findings can help managers, policymakers, and other stakeholders enhance the firm's disclosure by adopting good corporate and country- level governance practices. Originality/value: The study develops a disclosure quality index that examines various disclosure requirements attributes, encompassing financial and non-financial disclosure aspects. Such an index adds value to prior research on disclosure quality. Additionally, this study expands the scope of previous research by incorporating wide aspects of CG attributes and investigating the role of country-level governance.

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