Organizational culture and corporate risk disclosure

Abstract

Purpose -The main purpose of this paper is to investigate the relationship between organizational culture and corporate risk disclosure for listed companies in the United Arab Emirates (UAE). Design/methodology/approach -The organizational culture is represented by four dimensions: Clan, Adhocracy, Market and Hierarchy (Cameron and Quinn, 1999). Data are computed from the financial reports of all listed companies on the UAE Stock Market as of the year ending 2005. The multiple regression analysis model, ordinary least square, is used to test the study hypotheses. Findings -Results show that the organizational culture of Hierarchy, which focuses on more formalized work procedures, has a significant positive effect on the companies' risk disclosure in the UAE business environment. Several other control variables are implemented to ensure reliability of results. Practical implications -Listed companies in the UAE are more responsive to formal rules and regulations on reporting risk disclosure, which is quite different from the "self-regulation" practices that are more common in some Western countries. Consequently, policymakers and regulators in the UAE, and in other countries with similar conditions, are encouraged to focus on continuous development of formal rules and procedures to enable more harmony with international best practices of risk disclosure. Originality/value -Unlike the majority of previous empirical studies, this is the first study to incorporate a behavioral endogenous organizational culture model to explain the main determinants of risk disclosure, which opens the door for more understanding of the risk disclosure output function as a management process.

The Impacts of Transformational Leadership on Competitive Advantage of Local Accounting Firms

“…The second characteristic differentiates effectiveness criteria that emphasizes internal orientation as opposed to external orientation Clan culture orientation focuses on human relations that prioritizes on internal cohesiveness and orientation, participation and loyalty, teamwork, and commitment in employee-firm connections (Morgan & Vorhies, 2018). Organizations that adopt clan culture orientation will feel like a family that is portrayed by following those in the higher position, less restriction on operational activities and tolerance for ambiguity in structure and procedures that can obscure information disclosure (Elkelish & Hasan, 2014). With such values implemented in an organization, it will create collectivism nature and high sense of loyalty and commitment.…”

“…Within the hierarchy, there are centralized structures in place for most processes, especially communication and decision making (Parolini & Parolini, 2012). Leaders of hierarchical organizations are expected to be more risk-averse due to the emphasis on being transparent, enforcement of roles, and rules regulations under the basis of highly structured organizations (Elkelish & Hasan, 2014). By disclosing risks and information, the uncertainties are reduced and thus, increasing certainty and clarity.…”

Cross-Country Analysis of Transparency of Risk Information in Islamic Banks: Measurement and Effect of Islamic Corporate Governance

“…Research on transparency of risk has been mostly conducted on conventional companies and banks such as Al-Shammari (2014;) Hassan (2009); Linsley et al, (2006); Naser et al, (2006);ElKelish & Hassan, (2014), so that research transparency of risk information in Islamic banks needs to be done further. In addition, research related to the transparency of Islamic banks that looks more at aspects of corporate governance (Abdullah et al, 2013(Abdullah et al, , 2015Grassa et al, 2016;Grassa & Chakroun, 2016;Samaha et al, 2015) and disclosure of corporate social responsibility in Islamic banks (El-Halaby & Hussainey, 2016;Khurshid et al, 2014).…”

The Transparency of Risk Information in Islamic Banks: The Role of Independent Director and Shariah Supervisory

“…To the best of our knowledge, research on transparency of risk information is more frequently done on companies and banks in conventional context such as Lajili and Zéghal [16]; Linsley, et al [17]; Naser, et al [18]; ElKelish and Hassan [19]; Hassan [20]; dan Al-Shammari [21], so the further research in Islamic banks needs to be done. This is also due to research related to Islamic bank transparency looking more on corporate governance [22]- [25] and disclosure of corporate social responsibility in Islamic banks [26], [27].…”