Market Risk Disclosures, Corporate Governance Structure and Political Connection Evidence from the GCC

This paper investigates market risk disclosures (MRD) and its association with the strength of corporate governance structure of Gulf Co-operation Council (GCC) financial firms from 2007 to 2011. Using a comprehensive measure of market risk disclosure, our regression results provide evidence of a positive and significant association between market risk disclosures and the strength of corporate governance structure. We find that the positive association between market risk disclosures and strength of corporate governance structure is suppressed in the presence of politically connected royal family directors. Further analysis shows that director independence and the dual roles of the CEO and chairman of the board reduces the extent and quality of market risk disclosures. Our results are robust to alternative specifications and endogeneity tests