Management characteristics, risk disclosure quality and liquidity : a practical evidence from the Egyptian business environment

الملخص EN

Purpose: To examine the relation between management characteristics and risk disclosure quality, and to further analyze its impact on liquidity in a sample of non-financial companies listed on the Egyptian Stock Exchange.

Design and methodology: The study used content analysis to examine the annual reports for a sample of Egyptian non-financial firms that are listed on the Egyptian Stock Exchange in the period from 2019 to 2021, with a total number of 345 observations.

The study depended on this sample to test the hypotheses reflecting the relationship between management characteristics and risk disclosure quality, as well as the impact of risk disclosure quality on the decision to manage liquidity.

Multiple regression was used to analyze the results of the study models.

Findings: The results showed a significant relation between the quality of risk disclosure and the percentage of non-executive board members, board size, the quality of the audit committees, the presence of a risk management committee while it was negatively related with the dual role of the CEO.

Additionally, the results indicated that risk disclosure quality affects management decisions when determining the liquidity level.

Accordingly, the study recommends that Egyptian companies should be motivated to disclose risk information whether financial or non-financial to the level that will not affect their competitive position, and that an accounting standard should be developed to regulate risk disclosure practices and their accounting treatments.

Study limitations: The study is limited to examining the relation between management characteristics and risk disclosure quality in a sample of listed non-financial Egyptian companies in the period from 2019 to 2021, as well as analyzing the impact of such disclosure on management's decision when setting the level of liquidity.

Practical implications: This study can benefit Egyptian regulatory and professional bodies in developing an accounting standard to regulate risk disclosure practices and their accounting treatments, it can also benefit companies in their efforts to enhance their financial flexibility and accessing external financing sources.

Originality: This study contributes to the accounting literature by investigating the relation between management characteristics and risk disclosure quality.

Additionally, it analyzes the impact of risk disclosure quality on liquidity in an Egyptian context, as an example of emerging economies.