Title: Ownership structure, board's characteristics and corporate governance disclosure in GCC banks: what about Islamic banks?

Authors: Rihab Grassa; Raida Chakroun

Addresses: High Institute of Accounting and Business Administration (ISCAE), University of Manouba, Manouba, Tunisia ' Department of accounting, Higher Business Studies Institute at Carthage (IHEC), University of Carthage, Tunisia

Abstract: This paper assesses the effects of ownership structure and board's characteristics on the corporate governance (CG) disclosure for GCC banks. We based our study on a sample of 72 banks operating in five GCC countries and observed them over the period from 2006 to 2011. Our paper's findings suggest that the level of CG disclosure is relatively low in GCC banks. However, there has been a gradual improvement of CG disclosure over time and, nowadays, there is little difference between Islamic and non-Islamic banks. Our study's results show that higher presence of block holder ownership is associated with a reduced level of overall CG disclosure and, moreover, CEO duality, board size and board independence are associated with high CG disclosure. We find, also, that bank size, country transparency index and to be located in Bahrain have a positive effect on the overall level of CG disclosure. In addition, it appears that higher leverage and the Islamic nature of the bank tend to reduce banks' overall levels of CG disclosure. Furthermore, we observed mixed results for the effects of variables: foreign ownership; institutional ownership; profitability; bank age and listing status on CG disclosure. Our results shed light on how agency conflicts, faced by GCC banks, affected their level of CG disclosure. This paper encourages regulators in GCC countries to improve corporate governance mechanisms in their banking systems through the optimisation of ownership structure (dispersed ownership) and the board's characteristics (CEO duality, board size and board independence), in order to promote transparency and disclosure.

Keywords: corporate governance disclosures; GCC banks; Gulf Cooperation Council; ownership structure; board characteristics; Islamic banks; Islamic finance; banking industry; CEO duality; board size; board independence; bank size; country transparency index; Bahrain; foreign ownership; institutional ownership; profitability; bank age; bank listing status; agency conflicts.

DOI: 10.1504/IJAAPE.2016.079862

International Journal of Accounting, Auditing and Performance Evaluation, 2016 Vol.12 No.4, pp.360 - 395

Accepted: 03 Aug 2015
Published online: 28 Sep 2016 *

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