Corporate governance and risk disclosures: An empirical study of listed companies in Kenya

Abstract

This paper examines the relationships between corporate governance variables and the extent of risk disclosures among listed companies in Kenya. The study aims to empirically examine the relationship between corporate governance variables and risk disclosures in 48 listed non-financial companies in Kenya. Content analysis of annual reports for the period 2010-2016 was used to measure the level of risk disclosures and compute the risk disclosure index for each company studied. The relationships between variables were analysed using panel data analysis. The findings show that the percentage of non-executive directors, ownership dispersion, percentage of foreign ownership, women in boards affected significantly the level of risk disclosures in the studied companies. Additionally, the control variables, firm's size and firm's profitability also significantly affected the level of risk disclosures. It can be concluded that the agency theory and the signalling theory can be used to explain the risk disclosure behaviours of listed firms in Kenya. It is recommended that companies should strengthen their corporate governance mechanisms in order to deal with risks facing them.

Does Corporate Governance Impact Risk Disclosure? An Empirical Analysis in the Indian Context

“…Despite the involvement of family members on board, risk information is transparent and is not affected the business. The results are inconsistent with the results of researchers, which showed a positive relationship between ownership and risk disclosure (Abraham & Cox, 2007; Muturi, 2019). Despite the existence of family business and family members of the board, our results are inconsistent with risk disclosure.…”

“…Many studies have been conducted internationally (Abraham & Cox, 2007;Berger, 2012;Elshandidy et al, 2013Elshandidy et al, , 2015Koirala et al, 2020;Linsley & Shrives, 2006;Miihkinen, 2012;Saggar & Singh, 2017) these studies have focussed on disclosure of risk information. In the Indian context, as well as researchers working in the same area (Ahnan et al, 2020;Khandelwal et al, 2020;Saggar & Singh, 2017, 2019, who are analysing the diversified relationship between risk and governance, there has been some work related to financial disclosure and governance consisting of some common variables such as board characteristics and ownership (Raithatha & Bapat, 2014). Risk information disclosure helps a company in gaining investors' trust, determining stock prices of the company and further the profitability.…”

Corporate Governance and Risk Disclosure in Emerging Countries

“…These studies were conducted in both developed and emerging countries. Meanwhile, many prior studies [17][18][19][20][21][22][23] have called on the comparative studies among emerging countries and [24] emphases the study should focus on emerging countries that are situated in the African region. This study is responding to this request and would provide further insight on the risk disclosure and corporate governance literature.…”

Pengaruh Board Characteristics Terhadap Corporate Risk Disclosure Yang Dimoderasi Oleh Family Ownership

“…Pangestuti et al (2017) mengatakan bahwa eksistensi jumlah anggota dewan yang mencukupi akan meningkatkan fungsi pengawasan perusahaan, sehingga akan membantu menghindari terjadinya asimetri informasi. Penelitian yang dilakukan oleh Wachira (2019) menemukan bahwa board size memiliki pengaruh yang negatif dan signifikan dengan tingkat risk disclosure.…”