Are bank risk disclosures informative? Evidence from debt markets

Ahmed Elamer, Collins Ntim, Hussein A. Abdou, Andrews Owusu, Mohamed Elmagrhi and Awad Elsayed Awad Ibrahim

International Journal of Finance & Economics, 2021, vol. 26, issue 1, 1270-1298

Abstract: This study examines whether financial reporting with a specific focus on risk disclosures have a predictive (informative) effect on banks' credit ratings (BCRs) and, consequently, ascertains whether governance structures can moderate such an association. Using one of the largest bank‐level datasets collected from 12 Middle East and North African (MENA) countries over the 2006–2013 period to‐date, our findings are as follows. First, we find that risk disclosures have a predictive effect on BCRs. Second, we find that the relationship between risk disclosures and BCRs is contingent on the quality of governance structures. Specifically, we find that the informativeness of risk disclosures on BCRs is higher in banks with larger board size, greater independence, higher government ownership, and better Shariah supervisory board, but lower in banks with greater block ownership, higher foreign ownership and the presence of CEO duality. The central tenor of our findings remains unchanged after controlling for a number of firm‐ and country‐level factors, alternative risk disclosure measures, firm‐ and national‐level governance proxies, different types of banks, and potential endogeneities. The findings have important implications for investors, especially bondholders, standard‐setters, regulators, and central governments.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://doi.org/10.1002/ijfe.1849

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:26:y:2021:i:1:p:1270-1298

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().