The Role of Foreign Directors in Corporate Risk Disclosure: Empirical Evidence From Jordan

Malek Hamed Alshirah, Azhar Abdul Rahman and Ifa Rizad Mustapa

International Journal of Financial Research, 2019, vol. 10, issue 4, 119-127

Abstract: The current study examined the role of foreign directors in enhancing the level of risk disclosure in the annual reports of Jordanian listed companies. The content analysis method was used to measure the level of risk disclosure by computing the number of risk-related sentences in annual reports. To achieve the study¡¯s objective, random effect model has been applied on a sample of 376 firm-year observations of Jordanian non-financial companies for the period of 2014-2017. The findings are in line with the argument of agency theory and resource dependence theory, which posits that existence of foreign members on the board contributes in increasing the level of risk disclosure. The study aimed to fill the gap in the literature of risk disclosure regarding the relationship between foreign directors and risk disclosure. It is expected that the findings will be useful to researchers, authorities and investors alike in understanding the important role of foreign directors in improving practices of risk disclosure in Jordan.

Keywords: risk disclosure; foreign directors; content analysis; Jordan (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:10:y:2019:i:4:p:119-127

DOI: 10.5430/ijfr.v10n4p119

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