Disclosure violations: does governance matter?

ABSTRACT

Since 2004, the Jordanian Securities Commission (JSC) has been publishing annually a list of firms that violate disclosure requirements; however, despite these publications, the level of violations is continuing to rise. We hypothesize that ownership structure and board features can affect the level of violations of manufacturing and service firms listed on the Amman Stock Exchange (ASE). The logit regression estimates assume that managerial and foreign ownership limit violation practices, while institutional ownership has no effect. It is also concluded that the characteristics of the board are not significantly related to the level of violations, apart from the audit committee and political connections, which have significant negative and positive impacts respectively.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 These violations include providing misleading information, lack of material disclosure, exceeding time limits and fraudulent information (Saaydah 2017)

2 The start date of the research sample is justified, as the full implementation of the Jordanian corporate governance code by firms was in 2011.

3 The Security Exchange Commission reports all violation types, but we only considered those related to disclosure, in line with the aim of the research.

4 Please refer to the operational measures of the research shown in Appendix 1.

5 The Hausman test null hypothesis is that there is no correlation between individuals-unobserved effects and predictors (Hausman 1978).