Corporate governance mediation impact on firm value via risk disclosure in the emerging capital market of Jordan

Abstract

Purpose: This thesis aims to empirically explore the impact of Corporate Governance mechanisms on Firm Value, with specific focus on how this impact mediated via Risk Disclosure, with in the context of the emerging capital market of Jordan for the period of 2015 - 2019. The investigation is conducted through the context of Services and Industrial companies listed on the Amman stock Exchange, providing insights relevant to similar emerging markets. This thesis also aims to examine the impact of the mandated Jordanian Corporate Governance directives of 2017 on the level of compliance with Corporate Governance principles and their impact on both the quantity and the quality of Risk Disclosure Design/Methodology/ Approach: Drawing on prior studies and the related theories including Agency theory, Signalling theory, Legitimacy theory, Stakeholders theory, and Resource Dependency theory, this research constructs a comprehensive model that reflects the interrelationships among the respective research variables. Using content analysis to collect both quantitative and qualitative data, the qualitative data is transformed into numerical values, enabling the application of quantitative methods. The research employs path analysis and utilizes Structural Equation Modelling to simultaneously investigate the strength and direction of the relationships between Corporate Governance variables, Risk Disclosure variables, and Firm Value (measured by Tobin’s Q ratio), while accounting for specific Control Variables. Results: The results of this research highlight the complexity of the interactions of Corporate Governance mechanisms, Risk Disclosure, and Firm Value. While some mechanisms significantly impact Risk Disclosure practices and Firm Value, others may have limited or no impact. In addition, the results show that the relationships between the respective research variables vary across different sectors. Moreover, the findings also reveal the diverse effects of Corporate Governance regulatory interventions and the introduction of mandated Corporate Governance practices across different variables and sectors.