Political connection, family ownership and corporate risk disclosure: empirical evidence from Jordan

Abstract

Purpose

This study aims to empirically examine whether the political connection is related to risk disclosure practices. The study also seeks to contribute to the existent risk disclosure literature by investigating the moderator effect of family ownership on this relationship.

Design/methodology/approach

The content analysis approach was used to collect data and determine the level of risk disclosure over the non-financial Jordanian firms listed on 1Amman Stock Exchange. The sample of this study contains 376 annual reports over four years from 2014 to 2017. It used the random effect regressions to examine the hypothesis of the study.

Findings

The results show that politically connected companies disclose less risk information than the unconnected ones in Jordan. The results also refer that family ownership contributes in mitigating the negative effect of the political connection on the level of corporate risk.

Practical implications

The results have implications for regulatory institutions such as the Jordan Securities Commission to take the negative effect of political connection in their consideration and impose further regulations to monitor this board’s attribute and control politicians’ domination on the board decisions.

Originality/value

The current study also contributes to the body of literature by investigating the effects of the political connections on the level of risk disclosure in the financial reports. To the best of the authors’ knowledge, the current study is the first to examine the effect of the political connection on the risk disclosure practices. Moreover, the study is among the first studies that examine the moderating role of family ownership on such relationship.

Citation

Alshirah, M.H., Alshira’h, A.F. and Lutfi, A. (2022), "Political connection, family ownership and corporate risk disclosure: empirical evidence from Jordan", Meditari Accountancy Research, Vol. 30 No. 5, pp. 1241-1264. https://doi.org/10.1108/MEDAR-04-2020-0868