IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v4y2014i2p369-384.html
   My bibliography  Save this article

Corporate Governance Mechanisms and Voluntary Disclosure Compliance. The Case of Banks in Jordan

Author

Listed:
  • Fawzi Al Sawalqa

Abstract

The current study comes to discuss the role of Central Bank in developing the corporate governance best practices in Jordanian banks. In addition, the study focuses on investigating the extent to which Jordanian banks are comply with the corporate governance code for banks in Jordan as outlined by Central Bank in 2007. Furthermore, it investigates the extent to which banks comply with the corporate governance code for banks in Jordan in transparency and disclosure. Based on the annual financial reports of 13 banks listed in Amman Stock Exchange (ASE) for 2012, the results indicated that the overall compliance with corporate governance code for banks in Jordan is 90.9%. The results show that the lower compliance is concentrated in audit committee as only 70.5% of the banks do comply with its rules as outlined in corporate governance code for banks. The expected reasons for such low compliance were discussed in the current study. The compliance rate with board of directors’ rules and general corporate governance information is 90.9% and 100% respectively. After computing the voluntary disclosure index, the results show that the average disclosure score is 61.3%, which is unsatisfactory. Apart from employee information, the results show high consistency in disclosure practices among Jordanian banks. The unsatisfactory percentage of disclosure implies that there are several factors may hinder banks from disclosing some sensitive information. The findings of the study have many applications for decision makers in Jordan and other developing countries.

Suggested Citation

  • Fawzi Al Sawalqa, 2014. "Corporate Governance Mechanisms and Voluntary Disclosure Compliance. The Case of Banks in Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 369-384, April.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:2:p:369-384
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_37_Corporate_Governance_Mechanisms_and_Voluntary_Disclosure1.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Article_37_Corporate_Governance_Mechanisms_and_Voluntary_Disclosure1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert M. Bushman & Joseph D. Piotroski & Abbie J. Smith, 2004. "What Determines Corporate Transparency?," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 207-252, May.
    2. World Bank, 2004. "India - Report on the Observance of Standards and Codes (ROSC) : Corporate Governance Country Assessment," World Bank Publications - Reports 14465, The World Bank Group.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    4. Boghean Florin & Hlaciuc Elena & Boghean Carmen, 2010. "The Role Of The Accountant Professional In The Context Of The Corporate Governance And The Externalisation Of The Accounting Function," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 832-838, December.
    5. Mine Aksu & Arman Kosedag, 2006. "Transparency and Disclosure Scores and their Determinants in the Istanbul Stock Exchange," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(4), pages 277-296, July.
    6. Stefanescu Cristina Alexandrina, 2012. "Ownership Concentration And Corporate Governance Disclosure -The Case Of Financial Institutions," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 830-836, July.
    7. Ruth Hidalgo & Emma García-Meca & Isabel Martínez, 2011. "Corporate Governance and Intellectual Capital Disclosure," Journal of Business Ethics, Springer, vol. 100(3), pages 483-495, May.
    8. Benjamin E. Hermalin & Michael S. Weisbach, 2012. "Information Disclosure and Corporate Governance," Journal of Finance, American Finance Association, vol. 67(1), pages 195-234, February.
    9. Dulacha G. Barako & Phil Hancock & H. Y. Izan, 2006. "Factors Influencing Voluntary Corporate Disclosure by Kenyan Companies," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(2), pages 107-125, March.
    10. World Bank, 2004. "Report on the Observance of Standards and Codes : Corporate Governance Country Assessment, Republic of Indonesia," World Bank Publications - Reports 14463, The World Bank Group.
    11. Pamela Kent & Jenny Stewart, 2008. "Corporate governance and disclosures on the transition to International Financial Reporting Standards," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(4), pages 649-671, December.
    12. Popa Adina & Peres Ion, 2008. "Aspects Regarding Corporate Mandatory And Voluntary Disclosure," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 3(1), pages 1407-1411, May.
    13. World Bank, 2004. "Corporate Governance Country Assessment : Jordan," World Bank Publications - Reports 14522, The World Bank Group.
    14. Ayman E. Haddad & Wasim K. AlShattarat & Haitham Nobanee, 2009. "Voluntary disclosure and stock market liquidity: evidence from the Jordanian capital market," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 5(3), pages 285-309.
    15. Shital Jhunjhunwala & Sharvani B, 2011. "Corporate Governance Disclosure and Transparency Framework," Indian Journal of Corporate Governance, , vol. 4(1), pages 62-73, January.
    16. Mohamed Chakib Kolsi, 2012. "The Determinants of Corporate Voluntary Disclosure: Evidence from the Tunisian Capital Market," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, vol. 0(4), pages 49-68, October.
    17. Gregory S. Miller, 2004. "Discussion of What Determines Corporate Transparency?," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 253-268, May.
    18. R.M. Haniffa & T. E. Cooke, 2002. "Culture, Corporate Governance and Disclosure in Malaysian Corporations," Abacus, Accounting Foundation, University of Sydney, vol. 38(3), pages 317-349, October.
    19. Eva Parum, 2005. "Does Disclosure on Corporate Governance Lead to Openness and Transparency in How Companies are Managed?," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(5), pages 702-709, September.
    20. Lori Holder-Webb & Jeffrey Cohen & Leda Nath & David Wood, 2008. "A Survey of Governance Disclosures Among U.S. Firms," Journal of Business Ethics, Springer, vol. 83(3), pages 543-563, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Juan Ignacio Leo-Castela & José Ignacio Sánchez Macias, 2021. "Las políticas de integridad corporativa como política económica en la OCDE," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 13(1), pages 143-170, March.
    2. Yousef Shahwan & Nor Raihan Mohammad, 2016. "Descriptive Evidence Of Corporate Governance & Oecd Principles For Compliance With Jordanian Companies," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    3. Muhamad Roslan Muhamad Yusoff & Ahmad Rahman Songip & Mas Bambang Baroto & Aini Suzana Ariffin, 2016. "Catalysing Growth Through Board Members Engagement In Strategy Execution," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    4. Aiwanehi Barbara Ofuani & Abdul-Hameed Adeola Sulaimon & Sunday Abayomi Adebisi, 2018. "Corporate Governance Practices: A Comparative Study of Selected Public Corporations in Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 192-202, March.
    5. Kamarudeen Babatunde Bello & Ahmad Jusoh & Khalil Md Nor, 2016. "Perspectives On Consumers’ Response To Corporate Social Responsibility," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    6. Ibrahim Mohd Al Hamadsheh & Barjoyai Bin Bardai & Abdoul Rahman Mhd Al Jounaidi, 2020. "The Mediating Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance among Listed Jordanian Companies," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(7), pages 150-157, July.
    7. Ismail Bin Lebai Othman & Sulaman Hafeez Siddiqui & Her Taufik, 2016. "Resistance Factors To Community Participation In Sustainable Tourism Development In Northern Sumatra Indonesia," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    8. Kalu Joseph Ufere & Aliagha Godwin Uche & Buang Bin Alias, 2016. "Social Determinants Of Voluntary Carbon Information Disclosure In The Real Estate Sector Of Malaysia," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    9. Roziana Shaari & Siti Aisyah Panatik & A. Rajab & Zainab Khalifah, 2016. "Engaging University’S Roles In Social Inclusion," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    10. Farouk Djermani & Arfan Shahzad & Adnan Ahmed Sheikh & Jamal Mohammed Esmail Alekam, 2016. "Factors Influencing The Intention To Use E-Government Services In Algeria: An Empirical Study," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    11. Dr. Baker Ahmad Aledwan & Dr. Omar Mohammed Zraqat & Dr. Lina Fuad Murwih Hussien, 2017. "The Impact of Ownership Structure on the Insurance Companies Applicability of Corporate Governance Instructions," Journal of Business & Management (COES&RJ-JBM), , vol. 5(3), pages 131-152, July.
    12. Ibrahim Mohd Al Hamadsheh & Barjoyai Bin Bardai & Abdoul Rahman Mhd Al Jounaidi, 2020. "The Mediatory Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance: A Pilot Study," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(7), pages 325-331, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ebrahim, Ahmed & Fattah, Tarek Abdel, 2015. "Corporate governance and initial compliance with IFRS in emerging markets: The case of income tax accounting in Egypt," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 46-60.
    2. Hichem Khlif & Kamran Ahmed & Mohsen Souissi, 2017. "Ownership structure and voluntary disclosure: A synthesis of empirical studies," Australian Journal of Management, Australian School of Business, vol. 42(3), pages 376-403, August.
    3. Al-Hadi, Ahmed & Al-Yahyaee, Khamis Hamed & Hussain, Syed Mujahid & Taylor, Grantley, 2019. "Market risk disclosures and corporate governance structure: Evidence from GCC financial firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 136-150.
    4. Collins Ntim & Teerooven Soobaroyen, 2013. "Black Economic Empowerment Disclosures by South African Listed Corporations: The Influence of Ownership and Board Characteristics," Journal of Business Ethics, Springer, vol. 116(1), pages 121-138, August.
    5. Harabi, Najib, 2007. "State of Corporate Governance in Arab Countries: An Overview," MPRA Paper 4566, University Library of Munich, Germany.
    6. Abdalla Shwairef & Azlan Amran & Mohammad Iranmanesh & Noor Hazlina Ahmad, 2021. "The mediating effect of strategic posture on corporate governance and environmental reporting," Review of Managerial Science, Springer, vol. 15(2), pages 349-378, February.
    7. Maria Manuela Martins & Ana Isabel Morais & Helena Isidro & Raul Laureano, 2018. "Intellectual Capital Disclosure: the Portuguese Case," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1224-1245, December.
    8. Abdul Mansulu & Daniel Anarfi, 2019. "Discretionary Disclosure of Listed Non-Financial Firms in an Emerging Market: Evidence from Ghana," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(3), pages 823-837.
    9. Sharma, Narendra, 2014. "Extent of corporate governance disclosure by banks and finance companies listed on Nepal Stock Exchange," Advances in accounting, Elsevier, vol. 30(2), pages 425-439.
    10. Her‐Jiun Sheu & Huimin Chung & Chih‐Liang Liu, 2010. "Comprehensive Disclosure of Compensation and Firm Value: The Case of Policy Reforms in an Emerging Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(9‐10), pages 1115-1144, November.
    11. Orazalin, Nurlan & Mahmood, Monowar, 2018. "Economic, environmental, and social performance indicators of sustainability reporting: Evidence from the Russian oil and gas industry," Energy Policy, Elsevier, vol. 121(C), pages 70-79.
    12. Munisi, Gibson & Randøy, Trond, 2013. "Corporate governance and company performance across Sub-Saharan African countries," Journal of Economics and Business, Elsevier, vol. 70(C), pages 92-110.
    13. Feng, Yumei & Pan, Yuying & Wang, Lu & Sensoy, Ahmet, 2021. "The voice of minority shareholders: Online voting and corporate social responsibility," Research in International Business and Finance, Elsevier, vol. 57(C).
    14. Dong, Minyue & Stettler, Alfred, 2011. "Estimating firm-level and country-level effects in cross-sectional analyses: An application of hierarchical modeling in corporate disclosure studies," The International Journal of Accounting, Elsevier, vol. 46(3), pages 271-303, September.
    15. Alberto Quagli & Elisa Roncagliolo & Gabriele D’Alauro, 2021. "The preparedness to adopt new accounting standards: a study of European companies on the pre-adoption phase of IFRS 15," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 290-303, September.
    16. Ray Donnelly & Mark Mulcahy, 2008. "Board Structure, Ownership, and Voluntary Disclosure in Ireland," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 416-429, September.
    17. Kelly Anh Vu & Greg Tower & Glennda Scully, 2011. "Corporate communication for Vietnamese listed firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 19(2), pages 125-146, July.
    18. Samaha, Khaled & Khlif, Hichem & Hussainey, Khaled, 2015. "The impact of board and audit committee characteristics on voluntary disclosure: A meta-analysis," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 13-28.
    19. Arcangelo Marrone, 2021. "Corporate Governance Variables and Integrated Reporting," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(5), pages 1-26, July.
    20. Hanen Ben Ayed-Koubaa, 2011. "Qualité de la communication financière au sujet des pratiques de gouvernance d'entreprise : cas du SBF 120," Post-Print hal-00646509, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:4:y:2014:i:2:p:369-384. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.