The status and determinants of corporate governance disclosure: The case of the Gulf countries

Corporate Governance Disclosure (CGD) is important for countries aiming to attract international investors and increase foreign investment. CGD helps mitigate the agency problem, improve firm value and enhance capital market efficiency. This research aims to assess the level of CGD in the Gulf countries. The Gulf countries have been selected due to their unique institutional and corporate characteristics. After assessing the CGD level in the Gulf, the association between diversity, board characteristics and CGD is identified while controlling for firm characteristics. Four board characteristics are used: the proportion of independent nonexecutive directors on board, the proportion of family members on board, role duality and board size; whereas diversity variables included proportion of foreign board members, proportion of foreign members in the senior management team, proportion of female board members and proportion of female members in the senior management team. A self-constructed disclosure index is developed to measure CGD. The index includes six sections: ownership structure and investor rights, financial transparency and information disclosure, information on auditors, board and senior management structure and process, information on board committees, and finally, corporate behavior and responsibility. This classification follows most of the international disclosure indices. The sample size includes 270 publicly listed non-financial companies listed on all Gulf stock exchanges, with data taken from 2009 annual reports. The average CGD is 32 percent, the maximum is 63 percent whereas the minimum is 5 percent. Proportion of independent non-executive directors on board, proportion of foreign board members and proportion of foreign members in the senior management team had a significant positive relationship with CGD. This research is considered the first to assess CGD across the six Gulf countries. This study has important regulatory and managerial implications.