The curvilinear relationship between governance structure and nonfinancial risk disclosure in Saudi Arabian firms: do ethical values matter?

Purpose The purpose of this paper is to examine the possibility of a curvilinear relationship between governance structure and nonfinancial risk disclosure. This paper also examines the moderating role of ethical values on the governance structure and nonfinancial risk disclosure relationship. Design/methodology/approach The sample of this paper contains 71 nonfinancial firms listed on the Saudi Stock Exchange from 2013 to 2020 (568 firm-year observations). The authors use OLS regressions to test the hypotheses. Findings The authors find there is a U-shaped relationship between governance structure and nonfinancial risk disclosure. Moreover, they show that ethical values moderate the relationship between governance structure and nonfinancial risk disclosure. Research limitations/implications The findings of this study offer implications for policy makers and firm managers in Saudi Arabia which there should periodically assess and adapt their governance frameworks due to potential fluctuations in the optimal level resulting from internal or external disruptions. Originality/value To the best of the authors’ knowledge, this is the first study in Saudi Arabia that provides new empirical evidence on the curvilinear relationship between governance structure and nonfinancial risk disclosure and the moderating role of ethical values on this relationship.