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Joint impact of corporate governance and risk disclosures on firm value: Evidence from emerging markets

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  • Khandelwal, Chandni
  • Kumar, Satish
  • Tripathi, Vibha
  • Madhavan, Vinodh

Abstract

We examine the joint impact of corporate risk disclosures (CRD) and board-centered corporate governance (CG) constructs such as board size, board meetings attended, number of female directors on board, number of executive and non-executive directors, and CEO duality on firm value. We consider a sample of 205 non-financial Indian firms listed on Bombay Stock Exchange, employing fixed effect panel regressions. We argue that the impact of CRD or CG mechanisms on firm value cannot be examined in isolation. A joint examination of both CRD and CG mechanisms reveals positive association between CRD and firm value. However, this significant positive association is attenuated owing to CEO duality. Additionally, number of female directors on the board has a positive and significant impact on firm value indicating gender diversity benefits to the firms. As a robustness check, we also undertook GMM estimations to capture endogeneity and in turn obtained results that are in line with panel estimations. The study’s findings have policy implications when it comes to board composition of Indian non-financial firms that should explore avenues to eliminate CEO duality in order to have CRDs an undiminished positive impact on firm value.

Suggested Citation

  • Khandelwal, Chandni & Kumar, Satish & Tripathi, Vibha & Madhavan, Vinodh, 2023. "Joint impact of corporate governance and risk disclosures on firm value: Evidence from emerging markets," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001484
    DOI: 10.1016/j.ribaf.2023.102022
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    References listed on IDEAS

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    1. Abraham, Santhosh & Cox, Paul, 2007. "Analysing the determinants of narrative risk information in UK FTSE 100 annual reports," The British Accounting Review, Elsevier, vol. 39(3), pages 227-248.
    2. Siti Aisyah Kamaruzaman & Mazurina Mohd Ali & Erlane K. Ghani & Ardi Gunardi, 2019. "Ownership structure, corporate risk disclosure and firm value: a Malaysian perspective," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 11(2), pages 113-131.
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    Cited by:

    1. Chen, Ruiyuan (Ryan) & Liu, Feiyu (Andy) & Zhao, Chen, 2024. "Worldwide board reforms and financial reporting quality," Research in International Business and Finance, Elsevier, vol. 69(C).
    2. Hunjra, Ahmed Imran & Jebabli, Ikram & Thrikawala, Sujani Sudhara & Alawi, Suha Mahmoud & Mehmood, Rashid, 2024. "How do corporate governance and corporate social responsibility affect credit risk?," Research in International Business and Finance, Elsevier, vol. 67(PA).
    3. Yang, Jie & Ying, Limeng & Xu, Xiaofang, 2024. "Digital transformation and accounting information comparability," Finance Research Letters, Elsevier, vol. 61(C).
    4. Lakhal, Faten & Hamrouni, Amal & Jilani, Ibtissem & Mahjoub, Imen & Benkraiem, Ramzi, 2024. "The power of inclusion: Does leadership gender diversity promote corporate and green innovation?," Research in International Business and Finance, Elsevier, vol. 67(PA).
    5. Elnahass, Marwa & Alharbi, Rana & Mohamed, Toka S. & McLaren, Josie, 2024. "Women directors’ attributes and demographics: New insights into bank risk," Research in International Business and Finance, Elsevier, vol. 71(C).

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