The Effect of Firms Characteristics on Corporate Risk Disclosure: Empirical Evidence from Amman Stock Exchange

Abstract

This paper measures the extent of corporate risk disclosure and the relationship of a set of firms characteristics (firm size, type of sector, leverage, profitability, and liquidity) on the level of risk disclosure in Jordan. The measurement of risk disclosure is based on published data of sampled Jordanian firms listed on Amman Stock Exchange using the content analysis approach. The findings indicate that large firms, industrial firms, and firms with a high level of leverage and profitability disclose more risk information than others do. However, the rate of liquidity showed a negative effect on the level of risk disclosure. The findings of this study also enhance the understanding of the corporate risk disclosure environment in Jordan as an example of the emerging markets in the Middle East. The study contributes to disclosure studies by being the first study to explore the relationship between the risk disclosure level and firm characteristics in Jordan. In addition, this study provides clear insight into the determinants of risk disclosure to the stakeholders of the Jordanian companies.

Impacts of Sustainability Performance and Firm Characteristics on Risk and Corporate Value

“…This finding is supported by the results of Khlif & Hussainey (2016) and Madrigal et al (2015) that large companies tend to disclose more risk information to ensure transparency due to tighter public visibility from their stakeholders including regulators and to evaluate corporate risks, especially those related to litigation and adverse reputation. Alshirah et al (2020), Soebyakto et al (2018), and Amran et al (2009 also showed that firm size has a significant influence on risk management disclosure and this reveals large and industrial companies tend to disclose broader risk information.…”