The Relationship Between the Risk Disclosure and Risk Management Committee on Banks Value: Empirical Evidence From Jordan




Voluntary Risk Disclosure, Risk Management, Market to Book Ratio, Risk Management Committee, Jordanian Banks


Purpose: Government levels may better fulfill the expanding expectations for public service governance, performance management, and accountability with the use of risk management backed by an integrated management accounting and control system. To explain how the risk management committee and risk disclosure affect bank value, this paper draws on agency theory and signaling theory, by using the market to book ratio (MTBR) to measure bank value.


Theoretical Framework: This article explains how the characteristics of risk management committees (RMCC) (size, independence, qualifications, meetings, executive membership, expertise, and dual membership) and voluntary risk disclosure influence each other on the value of Jordanian banks from 2014-2021.


Design/methodology/approach: The descriptive statistics of risk disclosure practices were calculated by the study sample using data from 18 banks collected between 2014 and 2021. The study variables' observations have an unbalanced distribution as well. 120 observations across all study variables are included in this paper. To calculate the bank value in this study, we use the Market to Book Ratio (MTBR). The regression analysis employed the multiple regression model.


Findings: The results indicate that risk management committee qualifications in accounting or finance significantly negatively affect bank value, while other variables  have a significant impact on the value of Jordanian banks, such as risk management committee expertise, risk management committee dual membership with the compensation committee, risk management committee independence, and executive membership in the composition of the risk management committee.


Originality/value:  This paper provides new empirical evidence in financial and accounting literature regarding the effect of the RMCC characteristics on Jordanian banks' value. Also, The main contribution of the paper is the discovery that the influence of an RMCC tends to encourage more disclosure of risk management to minimize risks.


Download data is not yet available.


Abdullah, M. (2019). The Effect of Corporate Risk Disclosure toward Firm Value in Indonesia Sharia Stock Index. IOP Conference Series: Materials Science and Engineering, 662(3).

Abdullah, M., & Abdul-Shukor, Z. (2017). The Comparative Moderating Effect of Risk Management Committee and Audit Committee on the Association Between Voluntary Risk Management Disclosure and Firm Performance. Jurnal Pengurusan, 51, 159-172.

Abdullah, M., Abdul-Shukor, Z., Ahmad, A., & Mohamed, Z. M. (2015). Risk Management Disclosure: A study on the effect of voluntary risk management disclosure toward firm value. Journal of Applied Accounting Research, 16(3), 400-432.

Abdullah, M., Shukor, Z. A., & Rahmat, M. M. (2017). The Influences of Risk Management Committee and Audit Committee towards Voluntary Risk Management Disclosure. Jurnal Pengurusan, 50, 83-95.

Abdullah, N. M. H., Ahmad, Z., & Roslan, S. (2012). The influence of ownership structure on the firms dividend policy based Lintner model. International Review of Business Research Papers, 8(6), 71-88.

Abu-Abbas, & Y. E. (2016). Disclosure of Risks in Published Financial Reports: An Empirical Study on the Banking and Insurance Sector in Jordan. Master Thesis, Yarmouk University.

Abubakar, A. H., Ado, A. B., Mohamed, M. I., & Mustapha, U. A. (2018). The Effect of Risk Management Committee Attributes and Board Financial Knowledge on the Financial Performance of Listed Banks in Nigeria. American International Journal of Business Management (AIJBM), 1(5), 7-13.

Adams, M. B. (1994). Agency theory and the internal audit. Managerial auditing journal.

Aebi, V., Sabato, G., & Schmid, M. (2012). Risk management, corporate governance, and bank performance in the financial crisis. Journal of Banking & Finance, 36(12), 3213–3226.

Aguilera, R. V., Desender, K. A., & De Castro, L. R. (2011). A configurational approach to comparative corporate governance. Working Papers.

Ahmad, H., & Muslim, M. (2022). Several Factors Affecting Firm Value Manufacturing in Indonesia. Jurnal Akuntansi, 26(1), 127-143.

Aldhamari, R., Nor, M. N., Boudiab, M., & Mas’ud, A. (2020). The impact of political connection and risk committee on corporate financial performance: evidence from financial firms in Malaysia. The International Journal of Business in Society, 20(7), 1281-1305.

Al-Hadi, A., Hasan, M. M., & Habib, A. (2016). Risk Committee, Firm Life Cycle, and Market Risk Disclosures. Corporate Governance: An International Review, 24(2), 145-170.

Allini, A., Rossi, F. M., & Hussainey, K. (2016). The board’s role in risk disclosure:an exploratory study of Italian listed state-owned enterprises. Public Money & Management, 36(2), 113-120.

Alshirah, M. H., Alshira'h, A. F., & Lutfi, A. (2020). Audit committee's attributes, overlapping memberships on the audit committee and corporate risk disclosure: Evidence from Jordan. Accounting , 7(2), 423–440.

Al-Smadi. S. (2017). Corporate governance and Risk disclosures practices in the annual reports of Jordanian banks. PhD Thesis, University of Southampton, UK.

Altanashat, M., Al Dubai, M., & Alhety, S. (2019). The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies. Journal of Business and Retail Management Research, 13(3).

Altanashat, M., Aldubai, M., & Alhety, S. (2019). The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies. Journal of Business and Retail Management Research, 13(3), 256-269.

Al-Zaqeba, M. A. A., Ineizeh, N. I., Hussein, O. J., & Albawwat, A. H. (2022). The Effect of Corporate Governance Mechanisms on Earnings Management in Malaysian Manufacturing Companies. Asian Economic and Financial Review, 12(5), 354-367.

Azmi, N. A., Sweis, G., Sweis, R., & Sammour, F. (2022). Exploring Blockchain-enabled smart contracts technology implementation within ready-mixed concrete plants industry in Saudi Arabia. International Journal of Construction Management, 1-9.

Bashatwah, A. (2019). The Impact of Voluntary Risk Disclosure in Evaluating the Financial Performance by Using CAMELS Model: An Empirical Study on Commercial Banks Listed in Amman Stock Exchange. PhD Thesis, The World Islamic Sciences and Education University.

Basoglu, K. A., & Hess, T. J. (2014). Online Business Reporting: A Signaling Theory Perspective. Journal of Information Systems, 28(2), 67-101.

Battaglia, F., & Gallo, A. (2015). Risk governance and Asian bank performance: An empirical investigation over the financial crisis. Emerging Markets Review, 25, 53-68.

Bedard, J., Chtourou, S. M., & Courteau, L. (2004). The effect of audit committee expertise, independence, and activity on aggressive earnings management. Auditing: A journal of practice & theory, 23(2), 13-35.

Benthall, S., & Vilijoen, S. (2021). Data Market Discipline: From Financial Regulation to Data Governance. J. Int'l & Comp. L., 8, 459.

Beretta, S., & Bozzolan, S. (2004). A framework for the analysis of firm risk communication. The International Journal of Accounting, 39(3), 265-288.

Bhuiyan, M. U., Cheema, M. A., & Man, Y. (2020). Risk committee, corporate risk-taking and firm value. Managerial Finance, 47(3), 285-309.

Boudiab, M., & Ishak, S. (2020). The Influence of Risk Management Committee Attributes on Performance of Non-Financial Listed Firms in Malaysia. Journal of Critical Reviews, 7(19), 9857-9865.

Bozec, R., & Bozec, Y. (2012). The Use of Governance Indexes in the Governance-Performance Relationship Literature: International Evidence. Canadian Journal of Administrative Sciences/ Revue Canadienne des Sciences de l'Administration, 29(1), 79-98.

Bracci, E., Mouhcine, T., Rana, T., & Wickramasinghe, D. (2022). Risk management and management accounting control systems in public sector organizations: a systematic literature review. Public Money & Management, 42(6), 395-402.

Bravo, F. (2017). Are risk disclosures an effective tool to increase firm value? Managerial and Decision Economics, 38(8), 1116-1124.

Carlon, S., Loftus, J., & Miller, M. C. (2003). The challenge of risk reporting: regulatory and corporate responses. Australian Accounting Review, 13(3), 336-351.

Central Bank of Jordan. (2016). Governance for Banks.

Chou, T.-K., & Buchdadi, A. D. (2017). Independent Board, Audit Committee, Risk Committee, the Meeting Attendance Level and Its Impact on the Performance: A Study of Listed Banks in Indonesia. International Journal of Business Administration, 8(3), 24-36.

Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011, January). Signaling Theory: A Review and Assessment. Journal of Management, 37(1), 39-67.

Dayour, F., Adongo, C. A., & Agyeiwaah, E. (2020). Continuous intention to use mobile money (MM) services: Driving factors among small and medium-sized tourism and hospitality enterprises (SMTHEs). Africa Journal of Management, 6(2), 85-114.

Duffy, M. (2014). Towards Better Disclosure of Corporate Risk: A Look at Risk Disclosure in Periodic Reporting. ADELAIDE LAW REV, 35(2), 385-408.

Düsterhöft, M., Schiemann, F., & Walther, T. (2020). Let's Talk About Risk! The Firm Value Effect of Risk Disclosure for European Energy Utilities. Electronic Journal.

Elamer, A. A., & Benyazid, I. (2018). The Impact of Risk Committee on Financial Performance of UK Financial Institutions. International Journal of Accounting and Finance, 8(2), 161-180.

Elnahass, M., Salama, A., & Yusuf, N. (2022). Earnings management and internal governance mechanisms: The role of religiosity. Research in International Business and Finance, 59, 101565.

Fafaliou, I., Giaka, M., Konstantios, D., & Polemis, M. (2022). Firms’ ESG reputational risk and market longevity: A firm-level analysis for the United States. Journal of Business Research, 149, 161-177.

Fali, I. M., Philomena, O. N., Ibrahim, Y., & Amos, J. (2020). Risk Management Committee Size, Independence, Expertise and Financial Performance of Listed Insurance Firms in Nigeria. International Journal of Research and Innovation in Social Science (IJRISS), IV(V), 313-319.

Fraser, I., & Henry, W. (2007). Embedding risk management: Structures and approaches. Managerial Auditing Journal, 22(4), 392-409.

Fraser, J. R., Quail, R., & Simkins, B. J. (2022). Questions asked about enterprise risk management by risk practitioners. Business Horizons, 65(3), 251-260.

Gallati, R. R. (2022). Risk management and capital adequacy. McGraw-Hill.

Gallemore, J., & Labro, E. (2015). The importance of the internal information environment for tax avoidance. Journal of Accounting and Economics, 60(1), 149-167.

Gandía , L., & Pérez, T. A. (2005). e-Gobierno corporativo y transparencia informativa en las sociedades cotizadas españolas: un estudio empírico. Dirección de Estudios y Estadísticas Monografías.

Grassa, R., Moumen, N., & Hussainey, h. (2020). What drives risk disclosure in Islamic and conventional banks? An international comparison. International Journal of Finance & Economics.

Griffin, P., & Jaffe, A. M. (2022). Challenges for a climate risk disclosure mandate. Nature Energy, 7(1), 2-4.

Grove, H., Patelli, L., Victoravich, L., & Xu, T. (2011). Corporate Governance and Performance in the Wake of the Financial Crisis: Evidence from US Commercial Banks. Corporate Governance An International Review, 19(5), 418-436.

Gujarati, D. N. (2004). Basic Econometrics. McGraw-Hill Companies.

Haj Salem, I., Ayadi, S. D., & Hussainey, K. (2020). The joint effect of corporate risk disclosure and corporate governance on firm value. International Journal of Disclosure and Governance, 17(2), 123-140.

Halim, E. H., Mustika , G., Sari , R. N., Anugerah, R., & Mohd-Sanusi , Z. (2017). Corporate governance practices and financial performance: The mediating effect of risk management committee at manufacturing firms. Journal of International Studies, 10(4), 272-289.

Hamed, R. S., Al-Shattarat, B. K., Al-Shattarat, W. K., & Hussainey, K. (2022). The impact of introducing new regulations on the quality of CSR reporting: Evidence from the UK. Journal of International Accounting, Auditing and Taxation, 46, 100444.

Hameedi, K. S. ., Union, A. H. ., Talab, H. R. ., & Almagtome, A. H. . (2022). IFRS adoption, cost of equity and firm value: evidence from Iraq. International Journal of Professional Business Review, 7(3), e0602.

Hamid, N., & Purbawangsa, I. B. A. (2022). Impact of the board of directors on financial performance and company capital: Risk management as an intervening variable. Journal of Co-Operative Organization and Management, 10(2), 100164.

Hasan, I., Singh, S., & Kashiramka, S. (2022). Does corporate social responsibility disclosure impact firm performance? An industry-wise analysis of Indian firms. Environment, Development and Sustainability, 24(8), 10141-10181.

Hassanzadeh, B. R., & Mahroomi, R. (2018). The Effect of Risk Disclosure on the Share Price Anticipation based on Earnings and Firm Value. Financial Management Strategy, 5(4), 189-209.

Hines, C. S., & Peters, G. F. (2015). Voluntary risk management committee formation: Determinants and short-term outcomes. Journal of Accounting and Public Policy, 34(3), 267-290.

Hoitash, U., & Hoitash, R. (2009). Conflicting Objectives within the Board: Evidence from Overlapping Audit and Compensation Committee Members. Group Decis Negot, 18(1), 57-73.

ICAEW, (Institute of Chartered Accountants in England and Wales ). (2011). Reporting Business Risks: Meeting Expectations.

ICAEW, (Institute of Chartered Accountants in England and Wales). (2006). No Surprises: Working for Better Risk Reporting.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.

Jenwittayaroje, N., & Jiraporn, P. (2017). Do Independent Directors Improve Firm Value? Evidence from the Great Recession. International Review of Finance, 19(1), 207-222.

Jia, J., & Bradbury, M. E. (2020). Risk management committees and firm performance. Australian Journal of Management, 46(3), 369-388.

Jiang, L. (2020). Risk Management Committee and Bank Performance: Evidence from the Adoption of Dodd-Frank Act.

Jing Jia, Zhongtian Li. (2022). Risk management committees and readability of risk management disclosure, Journal of Contemporary Accounting & Economics, 18 (3).

Jo, H., & Harjoto, M. A. (2011). Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility. Journal of Business ethics, 103(3), 351-383.

Kakanda, M. M., Salim, B., & Chandren, S. (2017). Do board characteristics and risk management disclosure have any effect on firm performance? Empirical evidence from Deposit Money Banks (DMBs) in Nigeria. Business and Economic Horizons (BEH),13(4), 506-521.

Kakanda, M. M., Salim, B., & Chandren, S. (2018). Risk management committee characteristics and market performance: empirical evidence from listed review financial service firms in Nigeria. International Journal of Management and Applied Science, 4(2), 6-10.

Kakanda, M. M., Salim, B., Sitraselvi, & Chandren. (2017). Corporate Governance, Risk Management Disclosure, and Firm Performance: A Theoretical and Empirical Review Perspective. Asian Economic and Financial Review, 7(9), 836-845.

Kallamu, B. S. (2015). Risk Management Committee Attributes and Firm Performance. International Finance and Banking, 2(2), 2374-2089.

Kamaruzaman, S. A., Al, M. M., & Ghani, E. K. (2019). Ownership structure, corporate risk disclosure and firm value: a Malaysian perspective. Int. J. Managerial and Financial Accounting, 11(2), 113-131.

Kang, H. (2013). The prevention and handling of the missing data. Korean journal of anesthesiology, 64(5), 402.‏

Karim, S., Qamruzzaman, M., & Jahan, I. (2022). Nexus between Information Technology, Voluntary Disclosure, and Sustainable Performance: What is the role of Open Innovation. Journal of Business Research, 145, 1-15.

Kim, H.-Y. (2013). Statistical notes for clinical researchers: Assessing normal distribution (2) using skewness and kurtosis. Restorative Dentistry & Endodontics, 38(1), 52-54.

Kleinnijenhuis, J., Schultz, F., & Oegema, D. (2015). Frame complexity and the financial crisis: A comparison of the United States, the United Kingdom, and Germany in the period 2007–2012. Journal of Communication, 65(1), 1-23.

Kravet, T., & Muslu, V. (2013). Textual risk disclosures and investors’ risk perceptions. Review of Accounting Studies, 18(4), 1088-1122.

Kumar, V., Dixit, A., Javalgi, R. R. G., & Dass, M. (2017). Research framework, strategies, and applications of intelligent agent technologies (IATs) in marketing. Journal of the Academy of Marketing Science, 44(1), 24-45.

Kutum, I. (2014). Investigating Voluntary Risk Disclosure: The Case of Jordanian Banks. Journal of Modern Accounting and Auditing, 10(12), 1153-1166.

Laux, C., & Laux, V. (2008). Board Committees, CEO Compensation, and Earnings Management. The Accounting Review, 84(3), 869–891.

Leopizzi, R., Iazzi, A., Venturelli, A., & Principale, S. (2020). Nonfinancial risk disclosure: The“state of the art” of Italian companies. Corporate Social Responsibility and Environmental Management, 27(1), 358-368.

Leuz, C., & Wysocki, P. (2006). Capital-market effects of corporate disclosures and disclosure regulation. Research Study, Commissioned by the Task Force to Modernize Securities Legislation in Canada, 183-236.

Li, X., & Yang, H. I. (2016). Mandatory financial reporting and voluntary disclosure: The effect of mandatory IFRS adoption on management forecasts. The accounting review, 91(3), 933-953.

Li, Y., & Zhao, Z. (2017). The dynamic impact of intellectual capital on firm value: evidence from China. Journal Applied Economics Letters, 25(1), 19-23.

Liebenberg, A. P., & Hoyt, R. E. (2003). The Determinants of Enterprise Risk Management: Evidence From the Appointment of Chief Risk Officers. Risk Management and Insurance Review, 6(1), 37-52.

Linsley, P. M., & Shrives, P. J. (2006). Risk reporting: A study of risk disclosures in the annual reports of UK companies. The British Accounting Review, 38(4), 387–404.

Lonkani, R. (2018). Firm Value: Theory and Empirical Evidence. (P. S. Hoffmann, Ed.) BoD – Books on Demand.

Louhichi, W., & Zreik, O. (2015). Corporate Risk Reporting: A Study of The Impact of Risk Disclosure on Firms Reputation. Economics Bulletin, 35(4), 2395-2408.

Lyon, T. P., & Maxwell, J. W. (2019). “Voluntary” approaches to environmental regulation. In Economic institutions and environmental policy (pp. 75-120). Routledge.

Makhlouf, M. H., Oroud, Y., & Soda, M. Z. (2020). Does The Board Independence Influence The Association Between Risk Disclosure And Firm Value? Evidence From Jordan. Humanities & Social Sciences Reviews, 8(4), 46-54.

Malahim, S.S., Hamour, A.M.A., Al-Zoubi, W.K., ...Maharmah, M.H., Alali, S.M. (2022). The Impact of Earnings Management Practices on the Market Value of Industrial Companies Listed on the Amman Stock Exchange: Evidence from Jordan. WSEAS Transactions on Business and Economics, 19, 1613–1620.

Malik, M. F., Zaman, M., & Buckby, S. (2019). Enterprise risk management and firm performance: Role of the risk committee. Journal of Contemporary Accounting and Economics, 16(1).

Malik, M., Shafie, R., & Ismail, K. (2021). Do risk management committee characteristics influence the market value of firms? Risk Management, 23(4), 172-191.

Morris, R. (1987). Signalling, Agency theory and accounting policy choice. Accounting and Business Research, 18(69), 47-56.

Morris, R. D. (1987). Signalling, agency theory and accounting policy choice. Accounting and business Research, 18(69), 47-56.

Nguyen, D. D., Hagendorff, J., & Eshraghi, A. (2015). Which executive characteristics create value in banking? ? Evidence from appointment announcements. Corporate Governance: An International Review, 23(2), 112-128.

Nicolau, J. L., & Sharma, A. (2022). A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event studies in tourism and hospitality. Annals of Tourism Research, 95, 103430.

Odubuasi, A., Theresa, N., & Okoye, P. (2020). Risk Management Committee Attributes And Financial Performance: Empirical Evidence From Listed Nigeria Banks. Journal of Accounting, Business and Social Sciences, 3(3), 106-115.

Onoja, A., & Agada, G. O. (2015). Voluntary Risk Disclosure in Corporate Annual Reports: An Empirical Review. Research Journal of Finance and Accounting, 6(17), 1-8.

Pettigrew, A., & McNulty, T. (1995). Power and Influence in and Around the Boardroom. Human Relations, 48(8), 845-873.

Power, M. (2009). The risk management of nothing. Accounting, organizations and society, 34(6-7), 849-855.

Rajab, B., & Schachler, M. H. (2009). Corporate risk disclosure by UK firms: trends and determinants. World Review of Entrepreneurship, Management and Sust, 5(3), 224-243.

Rimin, F., Bujang, I., Chu, A. S., & Said, J. (2021). The effect of a separate risk management committee (RMC) towards firms' performances on consumer goods sector in Malaysia. Business Process Management Journal.

Riyadh , H. A. ., Al-Shmam , M. A., & Firdaus , J. I. . (2022). Corporate Social Responsibility and GCG Disclosure on Firm Value with Profitability. International Journal of Professional Business Review, 7(3), 7, e0655.

Rosenstein, S., & Wyatt, J. G. (1990). Outside directors, board independence, and shareholder wealth. Journal of Financial Economics, 26(2), 175–191.

Ryan, S. G. (2012). Risk Reporting Quality: Implications of Academic Research for Financial Reporting Policy. Accounting and Business Research, 42(3), 295.

Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2014). Financial Accounting Theory and Analysis (11 ed.). John Wiley & Sons.

Scordis, N. A. (2018). Influence of a Board‐Level Risk Committee on Value. Journal of Insurance Issue, 41(1), 111-134.

Serag, A. A., & Daoud, M. M. (2022). A proposed Framework for Studying the Impact of Cybersecurity on Accounting Information to Increase Trust in The Financial Reports in the Context of Industry 4.0: An Event, Impact and Response Approach. Trade and Finance, 42(1), 20-61.‎

Soin, K., & Collier, P. (2013). Risk and risk management in management accounting and control. Management Accounting Research, 24(2), 82-87.

Solomon, J. F., SolomoN, A., & Norton, S. D. (2000). A conceptual framework for corporate risk disclosure emerging from the agenda for corporate governance reform. British Accounting Review, 32(4), 447–478.

Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.

Subramaniam, N., McManus, L., & Zhang, J. (2009). Corporate governance, firm characteristics and risk management committee formation in Australian companies. Managerial Auditing Journal, 24(4), 316-339.

Sumardani, E. S., & Handayani, R. S. (2019). The effect of risk disclosure on the cost of equity capital and firm value (An empirical study of manufacturing companies listed on the Indonesia Stock Exchange period 2015-2017). The Indonesian Accounting Review, 9(2), 133-141.

Tao, N. B., & Hutchinson, M. (2013). Corporate governance and risk management: The role of risk management and compensation committees. Journal of Contemporary Accounting & Economics, 9, 83-99.

Tong, S.-C. (2013). Exploring Corporate Risk Transparency: Corporate Risk Disclosure and the Interplay of Corporate Reputation, Corporate Trust and Media Usage in Initial Public Offerings. Corporate Reputation Review, 16(2), 131-149.

Ugwu, I., Adaeze, E. E., & Ogbu, C. G. (2021). A Critical Study Of Corporate Risk Management Committee Impact On Firm Performance. International Journal of Academic Information Systems Research (IJAISR), 5(4), 24-39.

Vafeas, N. (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1), 113-142.

Watson, A., & Marston, C. (2002). Voluntary disclosure of accounting ratios in the UK. The British Accounting Review, 34(4), 289-313.

Wincent, J., Anokhin, S., & Örtqvist, D. (2010). Does network board capital matter? A study of innovative performance. Journal of Business Research, 63(3), 265–275.

Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40, 185–211.




How to Cite

Malahim, S. S. (2023). The Relationship Between the Risk Disclosure and Risk Management Committee on Banks Value: Empirical Evidence From Jordan. International Journal of Professional Business Review, 8(3), e0572.