Corporate governance impact on risk disclosure in Shariah-compliant financial firms of Kuwait

Abdullah E. Alajmi, Bader A. Al-Shammari
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Abstract

Purpose

This study aims to investigate the relationship between corporate governance characteristics and risk disclosure in Shariah-compliant financial firms operating in Kuwait. It aims to provide insights into the factors influencing risk disclosure practices within these institutions.

Design/methodology/approach

The research used manual content analysis to quantify risk disclosure levels in the annual reports of 47 Shariah-compliant financial companies listed in Kuwait in 2020. Subsequently, multiple regression analysis was conducted to assess the impact of various corporate governance factors on the extent of risk disclosure.

Findings

The study reveals that while Kuwaiti Shariah-compliant firms exhibit limited risk disclosure in their annual reports, larger boards and committees, along with a higher number of independent directors, positively influence the level of risk disclosure. Interestingly, the size of the Shariah supervisory boards did not show a significant impact on risk disclosure practices.

Practical implications

These findings hold regulatory implications for Kuwait, highlighting the need to ensure information adequacy and promote market efficiency. Additionally, they offer practical insights for managers and investors seeking to optimize fund sourcing and diversify investment portfolios within the context of Shariah-compliant financial institutions.

Originality/value

This study contributes to the existing literature by providing empirical evidence on the relationship between corporate governance characteristics and risk disclosure in the specific context of Shariah-compliant financial firms operating in Kuwait. Furthermore, it identifies avenues for future research to delve into the influence of additional governance factors on risk disclosure practices within this unique financial landscape.

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公司治理对科威特符合伊斯兰教法的金融公司风险披露的影响
目的 本研究旨在调查在科威特经营的符合伊斯兰教法的金融公司的公司治理特征与风险披露之间的关系。研究采用人工内容分析法,对 2020 年在科威特上市的 47 家符合伊斯兰教法的金融公司年度报告中的风险披露水平进行量化。研究结果表明,虽然科威特符合伊斯兰教法的公司在其年度报告中披露的风险有限,但规模较大的董事会和委员会以及较多的独立董事会对风险披露水平产生积极影响。有趣的是,伊斯兰教法监督委员会的规模并未对风险披露做法产生重大影响。 这些研究结果对科威特的监管具有重要意义,强调了确保信息充分性和提高市场效率的必要性。此外,这些研究还为在符合伊斯兰教法的金融机构中寻求优化资金来源和分散投资组合的管理者和投资者提供了实用的见解。 本研究为现有文献做出了贡献,提供了在科威特经营的符合伊斯兰教法的金融公司这一特定背景下公司治理特征与风险披露之间关系的实证证据。此外,本研究还指出了未来的研究方向,以深入研究在这一独特的金融环境中其他治理因素对风险披露实践的影响。
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来源期刊
CiteScore
4.80
自引率
22.70%
发文量
78
期刊介绍: The journal provides a dynamic forum for the advancement of accounting and business knowledge based on Shari’ah and Islamic activities that have an impact on the welfare of society. JIABR publishes articles on the interplay between Islamic business ethics, accounting, auditing and governance, in promoting accountability, socio-economic justice (adl) and everlasting success (al-falah). It seeks to inform, among others, current theoretical and empirical research and practice in Islamic accounting, auditing and corporate governance, management of Islamic organizations, accounting regulation and policy for Islamic institutions, Shari’ah auditing and corporate governance, financial and non-financial performance measurement and disclosure in Islamic institutions and organizations. All styles of research, theoretical and empirical, case studies, practice-based papers and research notes that are well written and falling within the journal''s scope, are generally welcomed by the journal. Scope/Coverage Development of accounting, auditing and corporate governance concepts based on Shari’ah Socio-political influence on accounting and auditing regulation and policy making for Islamic financial institutions and organizations Historical perspectives on Islamic accounting, auditing and financial management Critical analysis on issues and challenges on accounting disclosure and measurement, Shari’ah audit and corporate governance Controls and risks in Islamic organizations Financial and non-financial performance measurement and disclosure.
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