Description
This paper aims to examine the impact of firm-specific characteristics on managers’
identity disclosure in the Gulf Cooperation Council (GCC) region.
Accounting Research Journal
Impact of firm-specific characteristics on managers’ identity disclosure
Etumudon Ndidi Asien
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Etumudon Ndidi Asien , (2014),"Impact of firm-specific characteristics on managers’ identity disclosure",
Accounting Research J ournal, Vol. 27 Iss 2 pp. 150 - 168
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Impact of frm-specifc
characteristics on managers’
identity disclosure
Etumudon Ndidi Asien
Faculty of Humanities & Social Sciences, Federal University Otuoke,
Otuoke, Nigeria
Abstract
Purpose – This paper aims to examine the impact of frm-specifc characteristics on managers’
identity disclosure in the Gulf Cooperation Council (GCC) region.
Design/methodology/approach – Research data were collected from 2010 annual reports and
fnancial statements of 403 listed frms in the GCC countries. The data were analyzed by multiple
regression models.
Findings – Evidence suggesting that managers’ identity is signifcantly disclosed by frms that
separate the offce of chairman from that of chief executive offcer was documented. It was also found
that mature frms signifcantly disclose their managers’ identity. Our fnding suggests that frms’
declaration that they comply with a set of corporate governance code leads them to disclose managers’
identity. However, we fnd that frms that are related to the state signifcantly disclose their managers’
identity, contrary to expectation.
Research limitations/implications – One limitation is the lack of a uniform classifcation of
industries by the stock exchanges in the GCC region. The implication of this is that researchers are
lacking a uniform standard to apply in their research. Another limitation is the use of only 2010 annual
reports and accounts; thus, there is a problemof inter-temporal generalizability. As markets in the GCC
countries are evolving, it will be interesting to capture the state of managers’ identity disclosure after
2010.
Practical implications – The paper has the potential to infuence frms in the GCC region to begin
disclosing managers’ personal details and other contact information. In addition, there is the prospect
that market regulators in the GCC region and other emerging markets who may read this research may
now require frms to disclose their managers’ identity.
Originality/value – This is an Original research paper.
Keywords Corporate governance, GCC countries, Voluntary disclosure, Duality role, Managers’
identity, State-related enterprises
Paper type Research paper
1. Introduction
This paper examines the impact of frm-specifc characteristics on managers’ identity
disclosure by frms in the Gulf Cooperation Council (GCC) region[1],[2]. In particular, it
examines the impact of separating the offce of chairman fromthat of the chief executive
offcer, the maturity of frms, frms’ relationship with the state and declaration of
complying with Principles of Corporate Governance on frms’ disclosure of managers’
identity. Voluntary disclosure models focus on managers’ discretion in deciding
The author extends sincere gratitude to the American University in the Emirates for providing
computing facilities to gather data for the research.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1030-9616.htm
ARJ
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150
Accounting Research Journal
Vol. 27 No. 2, 2014
pp. 150-168
©Emerald Group Publishing Limited
1030-9616
DOI 10.1108/ARJ-03-2013-0010
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whether or not to provide truthful voluntary disclosure to the capital market (Einhorn
and Ziv, 2012). Managers’ identity is a voluntary information itemfor which there are no
standards that regulate its disclosure, so frms can choose to (or not to) disclose it.
However, voluntary disclosure theories suggest that frms may derive benefts from
voluntarily disclosing their managers’ identity because, in doing so, they can build
investor confdence (Healy and Palepu, 2001). Voluntary disclosure attracts continued
research interests because of its perceived benefts to investors and the frm, but there
are few prior empirical research studies on managers’ identity disclosure. We are
motivated by the conjecture:
[…] that companies have incentives to disclose information voluntarily because it is most
likely that if frms do not disclose the identity of their offcers investors may invest their
endowments in other places (Godfrey et al., 2010).
Viewed from the perspective of agency theory, identity of managers appears to be an
important matter for dispersed outsider investors who lack close person-to-person
contact with the managers of their frm. If not for anything else, the disclosure of
managers’ identity is a step toward corporate transparency. To monitor and hold
managers personally accountable, dispersed outside investors would prefer to have
direct access to managers of their frm at any time they so desired.
The dispersed outside investor who must go through intermediaries and gatekeepers
before they can reach the managers of their frms is likely to be “processed” by the
gatekeepers who may not avail the outside investor of the needed information.
Anecdotal encounters with frms’ gatekeepers show that it is not in all instances that
people are allowed contact; in which case, the manager’s direct contact information can
be helpful. Managers’ ability to perform, and their level of responsibility, can also be
gleaned from their disclosed profles. The disclosure of managers’ identity is partly an
outcome of an enabling frm-specifc environment, and it can be described as falling
within the architecture of internal processes, which can lead to the availability of
frm-specifc information to those outside publicly traded frms (Bushman et al., 2004).
Better and enhanced internal processes that bring about the disclosure of managers’
identity can ensure that managers are accessible and accountable to dispersed outside
investors.
The literature suggests that a manager’s age, work experiences and educational
qualifcations matter in the manager’s ability to perform (Adawi and Rwegasira, 2011;
Tan and Jamal, 2006; Ball, 2009; Kothari, 2001; Karpoff et al., 2008a). For example,
Adawi and Rwegasira (2011) fnd directors’ experience to be one of the main factors that
increase the effectiveness of a corporate board in voluntarily promoting good practice in
disclosure. Investors may consider as important the age, work experiences, educational
qualifcations, previous employments and marital status of managers in their
assessment of managers’ ability to perform their jobs satisfactorily. Therefore, the
disclosure of managers’ identity is likely to assure investors, ex ante.
In an attempt to improve corporate governance and quality of fnancial reports and
disclosures, organized stock exchanges and market regulators in the GCC region have
recently provided mandated Principles of Corporate Governance. In addition, frms are
required to make declarative statements in their annual reports about whether or not
they complied with the principles.
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A number of motivations infuence our choice of the GCC region for this research.
First, a perusal of annual reports of frms in the region shows that most frms are not
forthcoming in disclosing their managers’ identity. There are little or no biodata of
managers in the region; very much unlike in Europe or in the USA, where this
information can be readily extracted from frms’ annual reports. The situation in the
GCC region can be attributed to its unique environment. The countries in the region face
very similar economic, market and regulatory environments, which are summarized
here:
• most frms in the region are owned by family members;
• managers in the region are people close to the major shareholders who they
personally know;
• the frms are owned mostly by wealthy regional investors;
• the region is awash with investible funds, which seems to work against voluntary
disclosure because regional investors may think that they do not need outside
fnance; and
• the region is very conservative, and frms operating there have a culture of
secretiveness in their disclosure practices.
Indeed, in these countries, as in Egypt, “there is secrecy and resistance to changes […]”
(Elsayed and Hoque, 2010). The secretive nature of the region has affected disclosure
practices. Furthermore, there is an opaqueness in disclosing information about persons
holding important positions.
Another motivation for the choice of GCC region is that the markets and stock
exchanges in the region are relatively young and immature (Adawi and Rwegasira,
2011, p. 275), and this provides a fertile ground for research. For example, Bahrain
Bourse was established in 1987, Doha Securities Market was established in 1995,
Kuwaiti Stock Exchange was established in 1962, Muscat Securities Market was
founded in 1989, Tadawul in Saudi Arabia was founded in 1978 and Dubai Financial
Market and Abu Dhabi Stock Exchange were established in 2000[3]. Because these stock
exchanges mandate frms to declare whether or not they comply with the Principles of
Corporate Governance, it is plausible that the mandate can affect GCC frms’ attitudes to
voluntary disclosures, unlike other stock exchanges where it is voluntary.
The literature lacks empirical research on managers’ identity disclosure in the region.
To the best of our knowledge, it appears that prior literature has not yet examined
managers’ identity disclosure anywhere in the world as conceptualized in this study, let
alone the state of managers’ identity disclosure in the young and emerging GCC region
in particular. This is the gap that we have identifed in prior studies, and which our
paper attempts to fll. Adawi and Rwegasira (2011, p. 278) observe that disclosure and
transparency remain signifcant concerns for the GCC. Hence, an important motivation
for our study is the need for better understanding of the state of managers’ identity
disclosure in the region.
In this paper, we have four expectations:
(1) We expect the separationof offce of chairmanfromthat of chief executive offcer
to lead to higher disclosure of managers’ identity.
(2) We expect mature frms to be more likely to disclose their managers’ identity.
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(3) We expect less disclosure from frms that are related to the state.
(4) We expect frms’ declaration that they comply with the Codes of Corporate
Governance to impel them to disclose their managers’ identity.
Data for the research are collected from 2010 annual reports of a sample of 403 frms
listed on the seven stock exchanges in the GCC region. The data are analyzed using
multiple regression models. We parcel managers’ identity into three categories, namely:
(1) contact details which consist of managers’ direct telephone numbers and direct
email addresses;
(2) ability/maturity details consisting of managers’ ages, levels of education,
experiences and previous employment; and
(3) managers’ level of responsibility as shown by their marital statuses. Our
analysis introduces controls for frm size and industry membership.
Our fndings are generally consistent with expectations. First, we fnd evidence
suggesting that managers’ identity is signifcantly disclosed by frms that separate
offce of chairman fromthat of chief executive offcer. Second, we fnd that mature frms
signifcantly disclose their managers’ identity. Third, we fnd no evidence to suggest
that frms that are related to the state are less likely to disclose their managers’ identity.
Finally, our evidence suggests that frms’ declaration that they comply with the
Principles of Corporate Governance is likely to increase disclosure of managers’ identity.
This paper makes two contributions to the disclosure literature:
(2) This is the frst study on the GCC region that examines the relation between
frm-specifc characteristics and managers’ identity disclosure.
(2) This paper increases our understanding of voluntary disclosure practices in the
region.
Our paper has implications for market regulators, boards and investors of listed
companies in the GCC region and other emerging markets. For example, frms can be
required to disclose their managers’ personal information in annual reports and at
company Web sites. As it is, presently, little is known about the identity of managers in
the region, so the disclosure should help in that direction. Our results give some insights
into frms’ disclosures in an environment of mandatory corporate governance code.
The remainder of the paper is organized as follows. The next section presents a
reviewof the literature. Section 3 introduces the research hypotheses. Section 4 presents
the methodology and research designs. Section 5 provides empirical results and
sensitivity check, while Section 6 concludes.
2. Review of the literature
Bushman et al. (2004) examine intensity of governance disclosure used by outside
investors to hold offcers and directors of frms accountable. The authors use identity of
offcers and directors as one of their proxies of intensity of governance disclosure. Their
proxy relies on management information as defned by CIFARindex. In our opinion, the
constituent parts of CIFAR’s management information include items that are not related
to managers’ personal details. While discussing Bushman et al. (2004), Miller (2004)
observes that it is unclear why Bushman et al.’s (2004) governance items are considered
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any more important than something such as capital expenditures. Miller (2004) adds
that it is unclear why this type of information would be the crucial data needed to make
external governance effective. Hence, our paper argues that Bushman et al.’s (2004)
identity construct is very broad. We extend Bushman et al. (2004) by focusing on specifc
properties of managers’ identity; e.g. managers’ direct telephone numbers, e-mail
addresses, ages, work experiences, educational qualifcations, past employment and
marital status. Tan and Jamal (2006), Ball (2009), Kothari (2001) and Karpoff et al.
(2008a) argue that managers’ ages, work experiences and educational qualifcations
matter in their ability to perform their job. In an experimental research, Tan and Jamal
(2006) fnd that managers with high foresight outperform those with low foresight in
their ability to smooth income. Ball (2009) asserts that managers may be negligent and
make unintentional errors due to factors such as inadequate experience and knowledge.
The remainder of the literature review focuses on the main constructs of our research.
These are separation of offce of chairman from that of chief executive offcer (duality
role), maturity of frms, frms’ relationship with the state and declaration by frms that
they comply with the Codes of Corporate Governance.
2.1 Duality role
Prior research such as Dechowet al. (1996), Rezaee (2005), Armstrong and Lacker (2009),
Adawi and Rwegasira (2011) and Jain et al. (2010) has examined the appropriateness of
having one individual serving the role of chairman and chief executive offcer of a frm
at the same time. Evidence from this research suggests that the duality role is
dysfunctional. For example, Dechow et al. (1996), who investigate the causes and
consequences of earnings management, fnd that frms that engage in earnings
manipulation are more likely to have a chief executive offcer who doubles as chairman
of the board. The authors provide evidence consistent with greater earnings
management by frms where duality occurs. Jain et al. (2010) posit that companies with
weaker corporate governance, particularly those with their chief executive offcer also
serving as chairman of the board, experience more signifcant negative stock price
changes.
2.2 Maturity of frms
Extant research such as that of Bowen et al. (2008), Burgstahler et al. (2006), Adawi and
Rwegasira (2011) has shown that maturity of frms matters in many respects. Mature
frms are likely to have workers who have sharpened their skills and practice time-tested
methods (Bowen et al. (2008)). Burgstahler et al. (2006) use frmage as a control variable
in their study of earnings management. They argue that listed frms are often more
mature, which can lead to different earnings properties. However, their fndings suggest
that age or maturity is not related to earnings management. Filatotchev (2008) posits
that mature frms with more heterogeneous resource pools may face a greater range of
stakeholder demands for accountability, arguing that as frms evolve over their life
cycle, the effectiveness of their corporate governance also undergoes shifts in balance of
accountability roles. According to Adawi and Rwegasira (2011), it is anticipated that
long-listed companies will gradually mature to become centers of best practice and will
implement the same in their corporate governance sooner than frms that have been
listed for only a short time.
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2.3 Firms’ relationship with the state
The relations between the state and the frm may have repercussions for disclosure.
Bushman et al. (2004) argue that states that directly own economic enterprises may
suppress frm-specifc information to hide expropriation activities by politicians and
their cronies. They also point out that it is possible that a benevolent government can
use its state ownership of enterprise to directly govern and manage frms, thereby
obviating the need for public information. These arguments imply a negative relation
between corporate disclosure and the extent of state-owned enterprises. Governments in
the GCC region have signifcant ownership in most of the listed frms (Aljifri and
Moustafa, 2007); hence, these frms are more likely to have greater ease with which to
secure fnancing from different sources compared to non-government-controlled frms.
In addition, these frms may have less pressure to comply with fnancial and
non-fnancial reporting requirements, which could give their managers leverage to
select self-serving disclosure choices.
2.4 Declaration of compliance with corporate governance principles
La Porta et al. (2000) posit that corporate governance is, to a large extent, a set of
mechanisms through which outside investors protect themselves against expropriation
by insiders. Rezaee (2005) argues that corporate governance determines the way a
corporation is governed through proper accountability for managerial and fnancial
performance. Rezaee (2005) further argues that availability of a regulatory framework
that helps further the cause of transparent corporate governance is a necessary
condition to corporate voluntary disclosure. Haniffa and Cooke (2002) examine the
relationships between a number of corporate governance, cultural and frm-specifc
characteristics and the extent of voluntary disclosure in the annual reports of a sample
of Malaysian companies. Specifcally, Haniffa and Cooke (2002) investigate the
relationship between corporate governance and the extent of voluntary disclosure.
Their fndings indicate a signifcant association between corporate governance and the
extent of voluntary disclosure. Al-Janadi et al. (2012) investigate the level of voluntary
disclosure practices in Saudi Arabia and the United Arab Emirates. Their results
indicate that the level of voluntary disclosure is low with an average of approximately
36 per cent for their sample. Al-Shammari and Al-Sultan (2010) investigate the
relationship between corporate governance characteristics and voluntary disclosure in
the annual reports of 170 companies listed on the Kuwaiti Stock Exchange in 2007. Their
results indicate the need to improve Kuwaiti market transparency through additional
constraints on corporate governance characteristics. Put together, results from these
studies suggest that voluntary disclosure in the GCC region is generally low. To
entrench good corporate governance culture, market regulators in the region have
formulated Principles or Codes of Corporate Governance, which frms are required to
comply with.
3. Development of hypotheses
In this section, we present the four hypotheses of the research, taking them one after
the other. The hypotheses are based on prior literature. Dechow et al. (1996), Rezaee
(2005), Armstrong and Lacker (2009), Adawi and Rwegasira (2011) and Jain et al.
(2010) examine the appropriateness of having one individual concurrently serving
the role of chairman and chief executive offcer of a frm. Dechow et al. (1996) fnd
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that frms who engage in earnings manipulation are more likely to have a chief
executive offcer who doubles as chairman of the board. Jain et al. (2010) posit that
frms with weaker corporate governance, particularly those with their chief
executive offcer also serving as chairman of the board, experience more signifcant
negative stock price changes. Based on this literature, our frst hypothesis (in the
alternative form) is stated thus:
H1. Separating the offce of chairman from that of chief executive offcer is more
likely to increase managers’ identity disclosure.
A number of extant research (Bowen et al., 2008; Burgstahler et al., 2006; Adawi and
Rwegasira, 2011) show that maturity matters in the life of the frm. For example,
Burgstahler et al. (2006) argue that listed frms are often more mature, which could
lead to different disclosure outcomes. Adawi and Rwegasira (2011) argue that
companies that have been listed for a longer time would be expected voluntarily to
have developed better disclosure practices. The authors anticipate that long-listed
companies will gradually mature to become centers of best practice and will
implement the same in their corporate governance sooner than frms that have been
listed for only a short time. Bowen et al. (2008) posit that mature frms are likely to
have workers who have sharpened their skills over the years and practice
time-tested methods. Filatotchev (2008) argues that as frms evolve over their life
cycle, the effectiveness of their corporate governance also undergoes shifts in
balance of accountability roles. We state our next alternative hypothesis as
follows:
H2. Mature frms are more likely to disclose their managers’ identity.
It is argued that government-controlled frms are less likely to disclose frm-specifc
information (Elsayed and Hoque, 2010; Bushman et al., 2004). Bushman et al. (2004)
argue that states that directly own economic enterprises may suppress frm-specifc
information to hide expropriation activities by politicians and their cronies.
Bushman et al. (2004) also argue that it is possible that a benevolent government
uses its state ownership of enterprises to directly govern and manage frms, thereby
obviating the need for public information. On the basis of the above arguments, we
hypothesize (in the alternative) that:
H3. Firms that are related to the state are less likely to disclose their managers’
identity.
Elsayed and Hoque (2010, p. 22) are of the view that extensive corporate governance
recommendations limit private benefts of control. Haniffa and Cooke (2002), who
investigated the relationship between corporate governance and the extent of
voluntary disclosure, found that there is a signifcant association between corporate
governance and the extent of voluntary disclosure. Our paper’s thesis is that frms
that declare that they comply with the Principles of Corporate Governance can be
impelled to follow through their declaration by actually disclosing managers’
identity. So, we expect the declaration to have a positive impact on frms’ disclosure
of their managers’ identity. Our fnal hypothesis is stated in the alternative to the
effect that:
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H4. Firms’ declaration that they comply with the principles of corporate governance
Is more likely to increase managers’ identity disclosure[4].
4. Methodology and research designs
4. 1 Sources and method of data collection
We hand-collected data from online sources owned by frms listed on the seven stock
exchanges in the six GCC countries. The sources include frms’ online annual report and
accounts of 2010, the about us, investors’ relations or the contact us sections of frms’
Web sites. Our data collection method is consistent with that of Hope (2003, p. 10) and
Elsayed and Hoque (2010). We read through these sources to track the disclosure or
availability of the research variables provided by the frms. We visited and identifed
listed frms from Bahrain Bourse, Kuwait Stock Exchange, Muscat Securities Market,
Qatar Exchange, Dubai Financial Market and Abu Dhabi Stock Exchange in the United
Arab Emirates, and Tadawul in Saudi Arabia. While at the Web sites, we looked for the
“listed companies/securities” pages. We identifed an initial sample of 658 frms from
these stock exchanges. We placed restrictions for frms to be qualifed for inclusion in a
fnal sample. For frms to be included in the qualifying sample, we required that they
must:
• publish their annual reports and accounts in English;
• have a complete, functioning and active English version of their Web sites (those
still under construction were not considered);
• have management and/or director information in their annual reports and
accounts or in the about us, investors’ relations or the contact us sections of their
Web site; and
• be publicly quoted and trading on a stock exchange in the region.
These conditions reduced the initial 658 frms to 403, which were eventually used for the
analysis. The sample composition is contained in Table I.
4.2 Dependent, independent and control variables
The dependent, independent and control variables are identifed from the regression
equation:
Table I.
Distribution of frms by
country
Country
Number of frms
initially identifed
Number of
frms discarded
Number of frms used
in the analyses
Bahrain 45 11 34
Kuwait 202 87 115
Oman 153 58 95
Qatar 43 8 38
Saudi Arabia 150 75 75
United Arab Emirates 65 16 49
Total 658 255 403
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b
y
P
O
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D
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E
R
R
Y
U
N
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S
I
T
Y
A
t
2
1
:
2
0
2
4
J
a
n
u
a
r
y
2
0
1
6
(
P
T
)
?
ID ? ?
?
? B
1
CEO
?
CHAIR ? B
2
AGE ? B
3
PARTY
? B
4
CO
?
GOV ? B
5
LnSIZE ? B
6
INDTY ? ?
(1)
We predict positive signs (?) for B
1
, B
2
, B
4
and B
5
, and a negative sign (–) for B
3
. We
are unable to predict a sign for B
6
.
Data and variables are defned in Table II.
4.2.1 Dependent variable. Our dependent variable is ?ID. ?ID conveniently
aggregates the three sets of manager details into one summary measure. The
information sets include:
• contact details;
• ability/maturity details; and
• responsibility details.
We use contact detail to proxy managers’ direct telephone numbers and direct e-mail
addresses; ability/maturity detail is proxied by managers’ ages, levels of education,
Table II.
Variables and defnitions
?ID??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY?B
4
CO
?
GOV?B
5
LnSIZE ?B
6
INDTY??
Dependent variable
Our dependent variable is ?ID. ?IDconsists of three information sets, namely, contact details,
ability/maturity details and responsibility details. In this paper, contact detail is proxied by a manager’s
direct telephone numbers and direct e-mail addresses; ability/maturity is proxied by a manager’s age,
level of education, experiences and previous employments. Amanager’s level of responsibility is proxied
by a manager’s marital status. Age can proxy both responsibility and maturity
We code the dependent variable as 1 where they are disclosed in our data sources and 0 otherwise
Independent variables
CEO_CHAIR is where the same individual occupies the offce of chairman and that of chief executive
offcer at the same time. CEO_CHAIR is coded 1 where the same person occupies the offce of chairman
and that of chief executive offcer at the same time (Bowen et al., 2008; Dechowet al., 1996; Armstrong and
Larcker, 2009; Jain et al., 2010; Adawi and Rwegasira, 2011; Rezaee, 2005)
AGE is the number of years since the frmwas founded (Karpoff et al., 2008a, 2008b; Ghosh, 2007;
Burgstahler et al., 2006)
PARTYbroadly describes any relationship(s), fnancial or otherwise, including stock ownership (wholly
or in part) between a frmand the state. The relationship also includes being a state-run enterprise, an
enterprise of a state-run enterprise, an enterprise having government appointees on the Board and other
connections between the state and the frm, other than for tax or regulatory purposes. PARTYis dummy
variable coded 1, where a frmhas no relationship with the state and 0 otherwise (Bushman et al., 2004;
Aljifri and Moustafa, 2007; Ghosh, 2007)
CO_GOVis a set of Principles of Corporate Governance issued by capital market regulators of a country.
Firms are required in their annual reports and accounts to explicitly declare whether or not they comply
with the principles. We score 1 for frms that disclose this information and 0 otherwise
Control variables
LnSIZE is used to measure the size of a frm. LnSIZE is measured as the natural logarithmof total assets
(Adawi and Rwegasira, 2011; Hope, 2003; Elsayed and Hoque, 2010; Bowen et al., 2008)
INDTYclassifes frms according to the industry they belong (Hope, 2003; Elsayed and Hoque, 2010). See
Table III for the classifcations used in the paper
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2
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6
(
P
T
)
experiences and previous employments. Managers’ level of responsibility is proxied by
their marital statuses[5]. We score frms as 1 where they disclose each itemof managers’
identity and 0 otherwise.
4.2.2 Independent variables. Our independent variables include separation of offce of
chairman from that of chief executive offcer (CEO_CHAIR), frms’ ages (AGE), frms’
relationship with the state (PARTY) and frms’ declaration that they comply with the
Principles of Corporate Governance (CO_GOV)[6]. CEO_CHAIRtakes the value of 1 where
the offce of chairmanis separate fromthat of chief executive offcer and0 otherwise. AGEis
the number of years since the frm was founded up to 2010. AGE is a proxy for maturity.
PARTYis the relationship that a frmhas or does not have with the state. PARTYis coded
1 where a frmis related to the state and 0 otherwise. CO_GOVis a statement of compliance
withPrinciples of Corporate Governance. We score frms 1 for disclosingthat theyadhere to
the Principles and 0 otherwise.
4.2.3 Control variables. To capture potentially omitted variables, we introduce frm-
and industry-specifc controls, which are, respectively, frm size (LnSIZE) and
industry-type (INDTY). Below, we motivate the choice and inclusion of these variables.
Prior literature has used size and industry type as controls, and we discuss thembriefy.
Ruland et al. (2007, p. 100) advise that it is still necessary to control for systematic
differences across frms such as frm size and industry type.
4.2.3.1 Firm size. Bushman et al. (2004, Table VI, Panel F) show that frm size is an
important variable for fnancial transparency. They fnd that fnancial transparency is
signifcantly higher for large frms. Hassan et al. (2006) investigate the relationship between
frmcharacteristics and the voluntary disclosure levels of non-fnancial companies listed on
the Egyptian Stock Exchange. Their fnding indicates a positive relationship between the
extent of voluntary disclosure and frmsize. Hope (2003, p. 229) argues that the demand for
informationis larger for larger frms. Adawi andRwegasira (2011) fndthat size is one of the
mainfactors that increases effectiveness of a corporate boardinvoluntarilypromotinggood
practice indisclosure. Takentogether, these prior studies suggest that frmsize is positively
associated with disclosure. We follow Hope (2003), Elsayed and Hoque (2010) and Bowen
et al. (2008) in using the natural logarithmof total assets to proxy frmsize.
4.2.3.2 Industry type. Prior studies report mixed result on industry membership. Hope
(2003, p. 233), who did not tabulate his results, fnds that industry membership is an
important explanatory factor for disclosure levels. However, Elsayed and Hoque’s (2010)
fnding suggests that industry type has little or no signifcant infuence on the level of
voluntary disclosure practice. In this paper, we use industry type (INDTY) to classify frms
according to the industry they belong. We compute the number and percentage of frms in
each industry classifcation defned in the study. These are presented in Table III, Panels A
and B. Panel Ashows that industrial frms constitute the highest percentage (about 27 per
cent) of the sample, followedbyreal estate (13per cent) frms, thenother services (12per cent)
not relatedto fnancial services or anyof the listedcategories. Agricultural sector appears to
be the lowest represented (about 8 per cent).
5. Results
5.1 Descriptive
The descriptives of the variables are contained in Table IV. The table shows that mean
(standard deviation) of disclosure of managers’ identity (?ID) is 1.166 (1.426). Mean
159
Firm-specifc
characteristics
D
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a
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A
t
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:
2
0
2
4
J
a
n
u
a
r
y
2
0
1
6
(
P
T
)
(standard deviation) of CEO_CHAIR is 0.499 (0.501). Mean (standard deviation) of AGE
is 24.605 (14.627).
The youngest (oldest) frm is 2 (59) years since it was founded. Mean (standard
deviation) of PARTYis 0.385 (0.487). CO_GOVhas a mean (standard deviation) of 0.460
(0.499). Mean (standard deviation) of LnSIZE is 20.140 (2.230), with maximum
(minimum) of 14.73 (25.54).
5.2 Univariate correlation analyses
Pearson (Spearman) correlations below (above) the diagonal (full sample) are presented
in Table V; p-values are italicized and in bracket in the table. We use Pearson
Table III.
Distribution of frms by
industry type and country
Panel A Panel B
Industry type Code
Number
of frms Per cent Bahrain Kuwait Oman Qatar
Saudi
Arabia UAE
Banking 1 42 10.40 5 8 5 5 9 10
Insurance 2 43 10.67 4 7 10 4 9 9
Other services 3 47 12.00 2 10 17 4 8 6
Financial services 4 39 9.68 1 19 8 3 4 4
Agriculture 5 34 8.40 3 7 10 5 5 4
Real estate 6 52 13.00 7 17 11 5 8 4
Hotel 7 37 9.18 5 16 4 4 4 4
Industrial 8 109 27.00 7 31 30 5 28 8
403 100 34 115 95 35 75 49
Table IV.
Descriptives of dependent,
independent and control
variables
N Mean SD Minimum Maximum Median
?ID 403 1.166 1.426 0 5 0
Independent variables
CEO_CHAIR 403 0.499 0.501 0 1 0
AGE 403 24.605 14.627 2 59 25
PARTY 403 0.385 0.487 0 1 0
CO_GOV 403 0.460 0.499 0 1 0
Control variables
LnSIZE 403 20.140 2.230 14.73 25.54 20
INDTY 403 5.057 2.477 1 8 5
Notes: Dependent variable, ?ID, is the sumof managers’ direct email address, telephone number, age,
work experience, previous employment details, level of education, and marital status; frm-specifc
variables are CEO_CHAIR, a dummy variable coded 1 where the offce of chairman is separate from
that of chief executive offcer and 0 otherwise; AGE is number of years since the frm was established;
PARTY, a dummy variable coded 1where the state has relationship with the frm and 0 otherwise;
CO_GOVis a dummyvariable coded1 (0) where a frmdiscloses (does not disclose) that it complies with
the corporate governance code applicable in the market where it is listed country; control variables are:
LnSIZE, which is the natural log of total assets; and INDTY, which is the industry to which frms
belong: 1 ?Banking, 2 ?Insurance, 3 ?Other services, 4 ?Financial services, 5 ?Agriculture, 6 ?
Real estate, 7 ?Hotel and 8 ?Industrial
ARJ
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:
2
0
2
4
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a
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a
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2
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6
(
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)
Table V.
Pearson (Spearman)
correlations matrix below
(above) the diagonal (full
sample)
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161
Firm-specifc
characteristics
D
o
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o
a
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d
b
y
P
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correlations to analyze the relationships among the variables. The dependent variable
(?ID) is signifcant and positively correlated with all our test variables (CEO_CHAIR,
AGE, PARTY and CO_GOV). Specifcally (?ID) is correlated at 0.176 with
CEO_CHAIR. ?ID is also correlated at 0.145 with AGE and is correlated (0.140) with
PARTY. The correlation between ?ID and CO_GOV is 0.360. Of the two control
variables, frm size (LnSIZE) is signifcantly correlated with ?ID, while INDTY is not
signifcantly correlated with ?ID. Our test variables have the predicted signs, except for
PARTY, which has the opposite predicted sign.
5.3 Multicollinearity
Multicollinearity does not appear to be a problem as all variance infation factors are ?
1.2 for both test and control variables. The Pearson (Spearman) correlation coeffcients
among the test and control variables did not exceed 0.170 (0.173), which was between
CO_GOV and LnSIZE.
5.4 Multiple regression analyses
We begin our empirical examination of the relationship between the dependent and
independent variables. Managers’ identity is regressed against the test and control
variables. See equation (1) in section 4.2 for the multiple regression equation. The result
of the regressions is presented in Table VI. In the table, standardized coeffcients
and t-values are in the top rows of each cell, while signifcant p-values are italicized
and in the bottom rows. Model 1 regresses managers’ identity on only the test
variables. Model 2 regresses managers’ identity on the test variables and frm size
(LnSIZE). Model 3 regresses managers’ identity on the test variables and industry-type
(INDTY). Model 4 regresses managers’ identity on all the variables, test and control.
Model 4 can be called the Full Model. We test against the alternative hypotheses. We test
H1, which posits that separating the offce of chairman from that of chief executive
offcer is more likely to increase managers’ identity disclosure. As shown in Table VI,
the coeffcients of CEO_CHAIRare positive and statistically signifcant ( p ?0.01) in all
the four models. This is consistent with our expectation and provides support for H1.
Our result is consistent with that of Jain et al. (2010) who fnd that frms whose chief
executive offcer also serves as chairman of the board experience more signifcant
negative stock price changes. H2 posits that mature frms are more likely to disclose
their managers’ identity. Maturity is proxied by frmage, AGE. The coeffcients of AGE
are positive in all the models, and they are statistically signifcant at conventional levels.
In Models 2 and 4, AGEis statistically signifcant at the 5 per cent level, while in Models
1 and 3, it is signifcant at the 0.01 level. This provides support for H2. Our fnding is
inconsistent with that of Burgstahler et al. (2006, p. 1003), who fnd that frm age is not
signifcantly related to aggregate earnings management. The test for H3 is positive and
signifcant at conventional levels in all the models (p ?0.01 and p ?0.05).
This indicates that frms that are related to the state are more likely to disclose their
managers’ identity. This fnding is contrary to expectation which states that frms that
are related to the state are less likely to disclose their managers’ identity. Our result
appears to be inconsistent with Elsayed and Hoque (2010) who fnd that
government-owned listed companies disclose less information in their annual reports
than privately owned listed companies. The test for H4 is positive and signifcant in all
the models ( p ? 0.01, p ? 0.05). This result suggests that frms’ declaration that they
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comply with the Principles of Corporate Governance can induce them to disclose their
managers’ identity. Our result is consistent with that of Haniffa and Cooke (2002), who
fnd a signifcant association between corporate governance and the extent of voluntary
disclosure in Malaysia.
The regressions in Table VI control for two potentially omitted variables, frm size
(LnSIZE) and industry-type (INDTY). The coeffcients of LnSIZE are positive and
statistically signifcant at conventional levels (p ?0.000) in Model 2 and the Full Model.
This result is consistent with that of Hassan et al. (2006), who investigated the
Table VI.
Multivariate analysis of
impact of frm-specifc
characteristics on
managers’ identity
disclosure
?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ?B
6
INDTY ??
Variable
Predicted
sign
Model 1 Model 2 Model 3 Model 4
coeffcient t coeffcient t coeffcient t coeffcient t
Intercept ? ?0.055 ?0.355 ?1.236 ?2.074 0.185 0.938 ?0.919 ?1.484
p-value (0.723) (0.039) (0.349) (0.139)
Firm-specifc variables
CEO_CHAIR (?) 0.219 4.791 0.233 5.065 0.232 5.045 0.244 5.271
p-value (0.000) (0.000) (0.000) (0.000)
AGE (?) 0.112 2.479 0.096 2.115 0.112 2.498 0.098 2.158
p-value (0.014) (0.035) (0.013) (0.032)
PARTY (?) 0.115 2.563 0.111 2.487 0.108 2.424 0.105 2.366
p-value (0.011) (0.013) (0.016) (0.018)
CO_GOV (?) 0.389 8.593 0.376 8.251 0.395 8.732 0.382 8.388
p-value (0.000) (0.000) (0.000) (0.000)
Control variables
LnSIZE (?) 0.094 2.052 0.087 1.880
p-value (0.041) (0.061)
INDTY ? ?0.089 ?1.990 ?0.082 ?1.812
p-value (0.047) (0.071)
Number of
observations
403 403 403 403
Adjusted R
2
0.203 0.210 0.209 0.226
Model 1: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ??
Model 2: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ??
Model 3: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ??
Model 4: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE
?B
6
INDTY ??
Notes: Dependent variable, ?ID, is the sumof managers’ direct email address, telephone number, age,
work experience, previous employment details, level of education, and marital status. Firm-specifc
variables are CEO_CHAIR, a dummy variable coded 1 where the offce of chairman is separate from
that of chief executive offcer and 0 otherwise; AGE is number of years since the frm was established;
PARTY, a dummy variable coded 1where the state has relationship with the frm and 0 otherwise;
CO_GOVis a dummy variable coded 1 (0) where a frmdiscloses (does not disclose) that it complies with
the corporate governance code applicable in the market where it is listed country; control variables are:
LnSIZE, which is natural log of total assets; and INDTY, which is the industry to which frms belong:
1?Banking, 2 ?Insurance, 3 ?Other services, 4 ?Financial services, 5 ?Agriculture, 6 ?Real estate,
7 ?Hotel and 8 ?Industrial.
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relationship between frm characteristics and the voluntary disclosure levels of
non-fnancial companies listed on the Egyptian Stock Exchange, and found a positive
relationship between the extent of voluntary disclosure and frm size. We have no
prediction for industry-type; however, it appears to have a statistically negative
non-signifcant effect on managers’ identity disclosure. This result is consistent with
Elsayed and Hoque (2010), who fnd that industry-type is not statistically signifcantly
related to the level of voluntary disclosure. The adjusted R
2
s of all the models are close,
in the range of 20-23 per cent. The Full Model shows that the independent variables
explain about 23 per cent of the variation in managers’ identity disclosure. The R
2
s
reported in our paper are comparable to the 27.2 per cent reported by Adawi and
Rwegasira (2011).
5.5 Additional analysis
In the original version of the paper, the power of our tests was low; the (untabulated)
result indicates a range of 6-8 per cent. To gain more power, an additional test variable,
CO-GOV, was included in re-estimated multiple regression models. Our results on the
initial/frst three test variables remain substantially unchanged by the test; however, in
the additional tests we gain more power as the adjusted R
2
s increase to between 20 and
23 per cent. In addition, the test result on CO-GOV was as predicted and statistically
signifcant. In sum, the additional tests increase our confdence in the validity of our
fndings[7].
6. Conclusions
In this paper, we examine the impact of frm-specifc characteristics on disclosure of
managers’ identity by frms in the GCC region. In particular, we examine what impact
separating the offce of chairman from that of chief executive offcer, maturity of frms,
frms’ relationship with the state and frms’ declaration that they comply with the
Principles of Corporate Governance have on manager’s identity disclosure. The research
sampled 403 listed frms drawn fromthe seven stock exchanges in the GCCregion. Little
is known in the literature about the disclosure of managers’ identity in the region. A
perusal of annual reports of frms in the region reveals that biodata of managers in the
region are lacking. This is unlike in Europe or in the USAwhere one can readily extract
this information from frms’ annual reports and other frms’ sources.
We test four hypotheses in the study. H1 posits that separating offce of chairman
from that of chief executive offcer is likely to lead to increased disclosure of managers’
identity. The test results in all the regression models (Table VI) are positive and
statistically signifcant (p ? 0.00). This fnding is consistent with our expectation
and provides support for H1. Our result is consistent with that of Jain et al. (2010) who
fnd that frms who have their chief executive offcer serving as chairman of the board
experience more signifcant negative stock price changes. The coeffcient of AGE is
positive and statistically signifcant at the 5 per cent level for the Full Model (p ?0.032).
This fnding provides support for H2 which states that mature frms are more likely to
their disclose managers’ identity. The sign for the third hypothesis is contrary to
expectation. The test for H3 shows that the coeffcients of PARTY are positive and
signifcant in all the models. This indicates that frms that are related to the state are
more likely to disclose their managers’ identity, contrary to expectation. The test for H4
indicates that the coeffcients of CO_GOV are positive and signifcant in all the models.
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This suggests that the declaration by frms that they comply with the Principles of
Corporate Governance can induce them to increase managers’ identity disclosure. Our
fnding is consistent with Haniffa and Cooke (2002), who investigated the relationship
between corporate governance and the extent of voluntary disclosure and found a
signifcant association between corporate governance and the extent of voluntary
disclosure.
The test fnds a positive association between frm size and manager’s identity
disclosure, consistent with prior research. Hassan et al. (2006) investigated the
relationship between frm characteristics and the voluntary disclosure levels of
non-fnancial companies listed on the Egyptian Stock Exchange and found a positive
relationship between the extent of voluntary disclosure and frm size. Adawi and
Rwegasira (2011) found frm size to be one of the main factors that increase the
effectiveness of a corporate board in voluntarily promoting good practice in disclosure.
The level of statistical signifcance of the test is mixed, as the Full Model is not
statistically signifcant. Industry-type (INDTY) appears to have a negative association
with managers’ identity disclosure. In the Full Model, INDTY is not statistically
signifcant. This fnding is consistent with Elsayed and Hoque (2010), who fnd that
industry type is not statistically signifcantly related to the level of voluntary disclosure.
In sum, this suggests that industry type has no signifcant impact on disclosure of
managers’ identity. The predictor variables explain between 20 and 23 per cent of the
variation in managers’ identity disclosure in the GCCregion. Specifcally, the Full Model
explains about 23 per cent of the variation in managers’ identity disclosure.
Our paper makes at least two contributions to the disclosure literature. First, our
paper is the frst study on the GCC region that examines the relation between
frm-specifc characteristics and managers’ identity disclosure. We also contribute to the
literature by increasing our understanding of voluntary disclosure practices in the GCC
region. Thus, our results give some insights into frms’ disclosure practice in an
environment with mandatory corporate governance.
This paper has some practical implications. The paper has the potential to infuence
frms in the GCC region to begin disclosing their managers’ identity, including personal
details and other contact information. In addition, there is the prospect that market
regulators in the GCC region and other emerging markets who may read this research
may begin to require frms to disclose their managers’ identity.
Two limitations bedevil this study. The frst is the study’s convenient classifcation
of frms into industries, which is as a result of different classifcation schemes used by
the seven stock exchanges in the region. For example, Saudi Arabia’s stock exchange
(Tadawul) has the “deepest” classifcation. It classifes companies into industries such
as banks and fnancial services, petrochemical industries, retail, cement, energy and
utilities, real estate development, agriculture and food industries, insurance,
telecommunication and information technology, building and construction,
multi-investment, industrial investment, transportation, media and publishing and
hotel and tourism. In the United Arab Emirates, there are no industry classifcations for
frms listed on either Abu Dhabi Stock Exchange or Dubai Financial Market. Oman
classifes its companies into fnancial, industrial and service industries. Doha Stock
Exchange classifes frm into banks and fnancial services, consumer goods and
services, industrials, insurance, real estate, telecoms and transportation. Companies
listed on the Bahrain Bourse are distributed into commercial bank, investment, services,
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insurance, industrial, hotels and tourism, etc. Kuwait Stock Exchange classifes frms
into oil and gas, basic materials, industrial, consumer goods, healthcare, consumer
services, banks, telecommunications, utilities, insurance, real estate, fnancial services,
investment instrument, technology and parallel. We would like to suggest the need for a
uniform classifcation of companies by the stock exchanges in the GCC region. The
study’s second limitation is the use of only 2010 annual reports and accounts. As GCC
markets are evolving, it will be interesting to capture the state of disclosure of managers’
identity after 2010.
Notes
1. In this paper, our construct of a manager includes persons occupying management or
executive positions, who can be called Chief Executive Offcer, President, General Manager,
Managing Director, Chairman and other equivalent appellations.
2. We use managers’ identity to connote information about the identity, biodata or profle of
managers of publicly quoted frms. The proxies for managers’ identity are defned in Table II:
variables and defnitions.
3. Source: See Arab Monetary Fund quarterly bulletin reports at www.amf.org.ae/
4. We thank one of the anonymous reviewers who suggested an additional test. The process of
implementing the test has led to the inclusion of this hypothesis.
5. Age canalso proxyresponsibility, but that is irrelevant so longas it is includedinaggregating
managers’ identity.
6. We once again thank one of the anonymous reviewers who suggested an additional test, the
process of which led to the inclusion of this variable.
7. We are grateful to an anonymous reviewer who suggested we run an additional test. The
process has led to the inclusion of CO_GOV variable.
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About the author
The author was, until recently, an Assistant Professor of Accounting and Finance at the College
of Business, American University in the Emirates, Dubai, United Arab Emirates, where he taught
accounting and fnance courses. He is now with the Federal University, Otuoke, Bayelsa State,
Nigeria, where lectures courses in the same areas.
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doc_997790249.pdf
This paper aims to examine the impact of firm-specific characteristics on managers’
identity disclosure in the Gulf Cooperation Council (GCC) region.
Accounting Research Journal
Impact of firm-specific characteristics on managers’ identity disclosure
Etumudon Ndidi Asien
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Impact of frm-specifc
characteristics on managers’
identity disclosure
Etumudon Ndidi Asien
Faculty of Humanities & Social Sciences, Federal University Otuoke,
Otuoke, Nigeria
Abstract
Purpose – This paper aims to examine the impact of frm-specifc characteristics on managers’
identity disclosure in the Gulf Cooperation Council (GCC) region.
Design/methodology/approach – Research data were collected from 2010 annual reports and
fnancial statements of 403 listed frms in the GCC countries. The data were analyzed by multiple
regression models.
Findings – Evidence suggesting that managers’ identity is signifcantly disclosed by frms that
separate the offce of chairman from that of chief executive offcer was documented. It was also found
that mature frms signifcantly disclose their managers’ identity. Our fnding suggests that frms’
declaration that they comply with a set of corporate governance code leads them to disclose managers’
identity. However, we fnd that frms that are related to the state signifcantly disclose their managers’
identity, contrary to expectation.
Research limitations/implications – One limitation is the lack of a uniform classifcation of
industries by the stock exchanges in the GCC region. The implication of this is that researchers are
lacking a uniform standard to apply in their research. Another limitation is the use of only 2010 annual
reports and accounts; thus, there is a problemof inter-temporal generalizability. As markets in the GCC
countries are evolving, it will be interesting to capture the state of managers’ identity disclosure after
2010.
Practical implications – The paper has the potential to infuence frms in the GCC region to begin
disclosing managers’ personal details and other contact information. In addition, there is the prospect
that market regulators in the GCC region and other emerging markets who may read this research may
now require frms to disclose their managers’ identity.
Originality/value – This is an Original research paper.
Keywords Corporate governance, GCC countries, Voluntary disclosure, Duality role, Managers’
identity, State-related enterprises
Paper type Research paper
1. Introduction
This paper examines the impact of frm-specifc characteristics on managers’ identity
disclosure by frms in the Gulf Cooperation Council (GCC) region[1],[2]. In particular, it
examines the impact of separating the offce of chairman fromthat of the chief executive
offcer, the maturity of frms, frms’ relationship with the state and declaration of
complying with Principles of Corporate Governance on frms’ disclosure of managers’
identity. Voluntary disclosure models focus on managers’ discretion in deciding
The author extends sincere gratitude to the American University in the Emirates for providing
computing facilities to gather data for the research.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1030-9616.htm
ARJ
27,2
150
Accounting Research Journal
Vol. 27 No. 2, 2014
pp. 150-168
©Emerald Group Publishing Limited
1030-9616
DOI 10.1108/ARJ-03-2013-0010
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whether or not to provide truthful voluntary disclosure to the capital market (Einhorn
and Ziv, 2012). Managers’ identity is a voluntary information itemfor which there are no
standards that regulate its disclosure, so frms can choose to (or not to) disclose it.
However, voluntary disclosure theories suggest that frms may derive benefts from
voluntarily disclosing their managers’ identity because, in doing so, they can build
investor confdence (Healy and Palepu, 2001). Voluntary disclosure attracts continued
research interests because of its perceived benefts to investors and the frm, but there
are few prior empirical research studies on managers’ identity disclosure. We are
motivated by the conjecture:
[…] that companies have incentives to disclose information voluntarily because it is most
likely that if frms do not disclose the identity of their offcers investors may invest their
endowments in other places (Godfrey et al., 2010).
Viewed from the perspective of agency theory, identity of managers appears to be an
important matter for dispersed outsider investors who lack close person-to-person
contact with the managers of their frm. If not for anything else, the disclosure of
managers’ identity is a step toward corporate transparency. To monitor and hold
managers personally accountable, dispersed outside investors would prefer to have
direct access to managers of their frm at any time they so desired.
The dispersed outside investor who must go through intermediaries and gatekeepers
before they can reach the managers of their frms is likely to be “processed” by the
gatekeepers who may not avail the outside investor of the needed information.
Anecdotal encounters with frms’ gatekeepers show that it is not in all instances that
people are allowed contact; in which case, the manager’s direct contact information can
be helpful. Managers’ ability to perform, and their level of responsibility, can also be
gleaned from their disclosed profles. The disclosure of managers’ identity is partly an
outcome of an enabling frm-specifc environment, and it can be described as falling
within the architecture of internal processes, which can lead to the availability of
frm-specifc information to those outside publicly traded frms (Bushman et al., 2004).
Better and enhanced internal processes that bring about the disclosure of managers’
identity can ensure that managers are accessible and accountable to dispersed outside
investors.
The literature suggests that a manager’s age, work experiences and educational
qualifcations matter in the manager’s ability to perform (Adawi and Rwegasira, 2011;
Tan and Jamal, 2006; Ball, 2009; Kothari, 2001; Karpoff et al., 2008a). For example,
Adawi and Rwegasira (2011) fnd directors’ experience to be one of the main factors that
increase the effectiveness of a corporate board in voluntarily promoting good practice in
disclosure. Investors may consider as important the age, work experiences, educational
qualifcations, previous employments and marital status of managers in their
assessment of managers’ ability to perform their jobs satisfactorily. Therefore, the
disclosure of managers’ identity is likely to assure investors, ex ante.
In an attempt to improve corporate governance and quality of fnancial reports and
disclosures, organized stock exchanges and market regulators in the GCC region have
recently provided mandated Principles of Corporate Governance. In addition, frms are
required to make declarative statements in their annual reports about whether or not
they complied with the principles.
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A number of motivations infuence our choice of the GCC region for this research.
First, a perusal of annual reports of frms in the region shows that most frms are not
forthcoming in disclosing their managers’ identity. There are little or no biodata of
managers in the region; very much unlike in Europe or in the USA, where this
information can be readily extracted from frms’ annual reports. The situation in the
GCC region can be attributed to its unique environment. The countries in the region face
very similar economic, market and regulatory environments, which are summarized
here:
• most frms in the region are owned by family members;
• managers in the region are people close to the major shareholders who they
personally know;
• the frms are owned mostly by wealthy regional investors;
• the region is awash with investible funds, which seems to work against voluntary
disclosure because regional investors may think that they do not need outside
fnance; and
• the region is very conservative, and frms operating there have a culture of
secretiveness in their disclosure practices.
Indeed, in these countries, as in Egypt, “there is secrecy and resistance to changes […]”
(Elsayed and Hoque, 2010). The secretive nature of the region has affected disclosure
practices. Furthermore, there is an opaqueness in disclosing information about persons
holding important positions.
Another motivation for the choice of GCC region is that the markets and stock
exchanges in the region are relatively young and immature (Adawi and Rwegasira,
2011, p. 275), and this provides a fertile ground for research. For example, Bahrain
Bourse was established in 1987, Doha Securities Market was established in 1995,
Kuwaiti Stock Exchange was established in 1962, Muscat Securities Market was
founded in 1989, Tadawul in Saudi Arabia was founded in 1978 and Dubai Financial
Market and Abu Dhabi Stock Exchange were established in 2000[3]. Because these stock
exchanges mandate frms to declare whether or not they comply with the Principles of
Corporate Governance, it is plausible that the mandate can affect GCC frms’ attitudes to
voluntary disclosures, unlike other stock exchanges where it is voluntary.
The literature lacks empirical research on managers’ identity disclosure in the region.
To the best of our knowledge, it appears that prior literature has not yet examined
managers’ identity disclosure anywhere in the world as conceptualized in this study, let
alone the state of managers’ identity disclosure in the young and emerging GCC region
in particular. This is the gap that we have identifed in prior studies, and which our
paper attempts to fll. Adawi and Rwegasira (2011, p. 278) observe that disclosure and
transparency remain signifcant concerns for the GCC. Hence, an important motivation
for our study is the need for better understanding of the state of managers’ identity
disclosure in the region.
In this paper, we have four expectations:
(1) We expect the separationof offce of chairmanfromthat of chief executive offcer
to lead to higher disclosure of managers’ identity.
(2) We expect mature frms to be more likely to disclose their managers’ identity.
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(3) We expect less disclosure from frms that are related to the state.
(4) We expect frms’ declaration that they comply with the Codes of Corporate
Governance to impel them to disclose their managers’ identity.
Data for the research are collected from 2010 annual reports of a sample of 403 frms
listed on the seven stock exchanges in the GCC region. The data are analyzed using
multiple regression models. We parcel managers’ identity into three categories, namely:
(1) contact details which consist of managers’ direct telephone numbers and direct
email addresses;
(2) ability/maturity details consisting of managers’ ages, levels of education,
experiences and previous employment; and
(3) managers’ level of responsibility as shown by their marital statuses. Our
analysis introduces controls for frm size and industry membership.
Our fndings are generally consistent with expectations. First, we fnd evidence
suggesting that managers’ identity is signifcantly disclosed by frms that separate
offce of chairman fromthat of chief executive offcer. Second, we fnd that mature frms
signifcantly disclose their managers’ identity. Third, we fnd no evidence to suggest
that frms that are related to the state are less likely to disclose their managers’ identity.
Finally, our evidence suggests that frms’ declaration that they comply with the
Principles of Corporate Governance is likely to increase disclosure of managers’ identity.
This paper makes two contributions to the disclosure literature:
(2) This is the frst study on the GCC region that examines the relation between
frm-specifc characteristics and managers’ identity disclosure.
(2) This paper increases our understanding of voluntary disclosure practices in the
region.
Our paper has implications for market regulators, boards and investors of listed
companies in the GCC region and other emerging markets. For example, frms can be
required to disclose their managers’ personal information in annual reports and at
company Web sites. As it is, presently, little is known about the identity of managers in
the region, so the disclosure should help in that direction. Our results give some insights
into frms’ disclosures in an environment of mandatory corporate governance code.
The remainder of the paper is organized as follows. The next section presents a
reviewof the literature. Section 3 introduces the research hypotheses. Section 4 presents
the methodology and research designs. Section 5 provides empirical results and
sensitivity check, while Section 6 concludes.
2. Review of the literature
Bushman et al. (2004) examine intensity of governance disclosure used by outside
investors to hold offcers and directors of frms accountable. The authors use identity of
offcers and directors as one of their proxies of intensity of governance disclosure. Their
proxy relies on management information as defned by CIFARindex. In our opinion, the
constituent parts of CIFAR’s management information include items that are not related
to managers’ personal details. While discussing Bushman et al. (2004), Miller (2004)
observes that it is unclear why Bushman et al.’s (2004) governance items are considered
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any more important than something such as capital expenditures. Miller (2004) adds
that it is unclear why this type of information would be the crucial data needed to make
external governance effective. Hence, our paper argues that Bushman et al.’s (2004)
identity construct is very broad. We extend Bushman et al. (2004) by focusing on specifc
properties of managers’ identity; e.g. managers’ direct telephone numbers, e-mail
addresses, ages, work experiences, educational qualifcations, past employment and
marital status. Tan and Jamal (2006), Ball (2009), Kothari (2001) and Karpoff et al.
(2008a) argue that managers’ ages, work experiences and educational qualifcations
matter in their ability to perform their job. In an experimental research, Tan and Jamal
(2006) fnd that managers with high foresight outperform those with low foresight in
their ability to smooth income. Ball (2009) asserts that managers may be negligent and
make unintentional errors due to factors such as inadequate experience and knowledge.
The remainder of the literature review focuses on the main constructs of our research.
These are separation of offce of chairman from that of chief executive offcer (duality
role), maturity of frms, frms’ relationship with the state and declaration by frms that
they comply with the Codes of Corporate Governance.
2.1 Duality role
Prior research such as Dechowet al. (1996), Rezaee (2005), Armstrong and Lacker (2009),
Adawi and Rwegasira (2011) and Jain et al. (2010) has examined the appropriateness of
having one individual serving the role of chairman and chief executive offcer of a frm
at the same time. Evidence from this research suggests that the duality role is
dysfunctional. For example, Dechow et al. (1996), who investigate the causes and
consequences of earnings management, fnd that frms that engage in earnings
manipulation are more likely to have a chief executive offcer who doubles as chairman
of the board. The authors provide evidence consistent with greater earnings
management by frms where duality occurs. Jain et al. (2010) posit that companies with
weaker corporate governance, particularly those with their chief executive offcer also
serving as chairman of the board, experience more signifcant negative stock price
changes.
2.2 Maturity of frms
Extant research such as that of Bowen et al. (2008), Burgstahler et al. (2006), Adawi and
Rwegasira (2011) has shown that maturity of frms matters in many respects. Mature
frms are likely to have workers who have sharpened their skills and practice time-tested
methods (Bowen et al. (2008)). Burgstahler et al. (2006) use frmage as a control variable
in their study of earnings management. They argue that listed frms are often more
mature, which can lead to different earnings properties. However, their fndings suggest
that age or maturity is not related to earnings management. Filatotchev (2008) posits
that mature frms with more heterogeneous resource pools may face a greater range of
stakeholder demands for accountability, arguing that as frms evolve over their life
cycle, the effectiveness of their corporate governance also undergoes shifts in balance of
accountability roles. According to Adawi and Rwegasira (2011), it is anticipated that
long-listed companies will gradually mature to become centers of best practice and will
implement the same in their corporate governance sooner than frms that have been
listed for only a short time.
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2.3 Firms’ relationship with the state
The relations between the state and the frm may have repercussions for disclosure.
Bushman et al. (2004) argue that states that directly own economic enterprises may
suppress frm-specifc information to hide expropriation activities by politicians and
their cronies. They also point out that it is possible that a benevolent government can
use its state ownership of enterprise to directly govern and manage frms, thereby
obviating the need for public information. These arguments imply a negative relation
between corporate disclosure and the extent of state-owned enterprises. Governments in
the GCC region have signifcant ownership in most of the listed frms (Aljifri and
Moustafa, 2007); hence, these frms are more likely to have greater ease with which to
secure fnancing from different sources compared to non-government-controlled frms.
In addition, these frms may have less pressure to comply with fnancial and
non-fnancial reporting requirements, which could give their managers leverage to
select self-serving disclosure choices.
2.4 Declaration of compliance with corporate governance principles
La Porta et al. (2000) posit that corporate governance is, to a large extent, a set of
mechanisms through which outside investors protect themselves against expropriation
by insiders. Rezaee (2005) argues that corporate governance determines the way a
corporation is governed through proper accountability for managerial and fnancial
performance. Rezaee (2005) further argues that availability of a regulatory framework
that helps further the cause of transparent corporate governance is a necessary
condition to corporate voluntary disclosure. Haniffa and Cooke (2002) examine the
relationships between a number of corporate governance, cultural and frm-specifc
characteristics and the extent of voluntary disclosure in the annual reports of a sample
of Malaysian companies. Specifcally, Haniffa and Cooke (2002) investigate the
relationship between corporate governance and the extent of voluntary disclosure.
Their fndings indicate a signifcant association between corporate governance and the
extent of voluntary disclosure. Al-Janadi et al. (2012) investigate the level of voluntary
disclosure practices in Saudi Arabia and the United Arab Emirates. Their results
indicate that the level of voluntary disclosure is low with an average of approximately
36 per cent for their sample. Al-Shammari and Al-Sultan (2010) investigate the
relationship between corporate governance characteristics and voluntary disclosure in
the annual reports of 170 companies listed on the Kuwaiti Stock Exchange in 2007. Their
results indicate the need to improve Kuwaiti market transparency through additional
constraints on corporate governance characteristics. Put together, results from these
studies suggest that voluntary disclosure in the GCC region is generally low. To
entrench good corporate governance culture, market regulators in the region have
formulated Principles or Codes of Corporate Governance, which frms are required to
comply with.
3. Development of hypotheses
In this section, we present the four hypotheses of the research, taking them one after
the other. The hypotheses are based on prior literature. Dechow et al. (1996), Rezaee
(2005), Armstrong and Lacker (2009), Adawi and Rwegasira (2011) and Jain et al.
(2010) examine the appropriateness of having one individual concurrently serving
the role of chairman and chief executive offcer of a frm. Dechow et al. (1996) fnd
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that frms who engage in earnings manipulation are more likely to have a chief
executive offcer who doubles as chairman of the board. Jain et al. (2010) posit that
frms with weaker corporate governance, particularly those with their chief
executive offcer also serving as chairman of the board, experience more signifcant
negative stock price changes. Based on this literature, our frst hypothesis (in the
alternative form) is stated thus:
H1. Separating the offce of chairman from that of chief executive offcer is more
likely to increase managers’ identity disclosure.
A number of extant research (Bowen et al., 2008; Burgstahler et al., 2006; Adawi and
Rwegasira, 2011) show that maturity matters in the life of the frm. For example,
Burgstahler et al. (2006) argue that listed frms are often more mature, which could
lead to different disclosure outcomes. Adawi and Rwegasira (2011) argue that
companies that have been listed for a longer time would be expected voluntarily to
have developed better disclosure practices. The authors anticipate that long-listed
companies will gradually mature to become centers of best practice and will
implement the same in their corporate governance sooner than frms that have been
listed for only a short time. Bowen et al. (2008) posit that mature frms are likely to
have workers who have sharpened their skills over the years and practice
time-tested methods. Filatotchev (2008) argues that as frms evolve over their life
cycle, the effectiveness of their corporate governance also undergoes shifts in
balance of accountability roles. We state our next alternative hypothesis as
follows:
H2. Mature frms are more likely to disclose their managers’ identity.
It is argued that government-controlled frms are less likely to disclose frm-specifc
information (Elsayed and Hoque, 2010; Bushman et al., 2004). Bushman et al. (2004)
argue that states that directly own economic enterprises may suppress frm-specifc
information to hide expropriation activities by politicians and their cronies.
Bushman et al. (2004) also argue that it is possible that a benevolent government
uses its state ownership of enterprises to directly govern and manage frms, thereby
obviating the need for public information. On the basis of the above arguments, we
hypothesize (in the alternative) that:
H3. Firms that are related to the state are less likely to disclose their managers’
identity.
Elsayed and Hoque (2010, p. 22) are of the view that extensive corporate governance
recommendations limit private benefts of control. Haniffa and Cooke (2002), who
investigated the relationship between corporate governance and the extent of
voluntary disclosure, found that there is a signifcant association between corporate
governance and the extent of voluntary disclosure. Our paper’s thesis is that frms
that declare that they comply with the Principles of Corporate Governance can be
impelled to follow through their declaration by actually disclosing managers’
identity. So, we expect the declaration to have a positive impact on frms’ disclosure
of their managers’ identity. Our fnal hypothesis is stated in the alternative to the
effect that:
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H4. Firms’ declaration that they comply with the principles of corporate governance
Is more likely to increase managers’ identity disclosure[4].
4. Methodology and research designs
4. 1 Sources and method of data collection
We hand-collected data from online sources owned by frms listed on the seven stock
exchanges in the six GCC countries. The sources include frms’ online annual report and
accounts of 2010, the about us, investors’ relations or the contact us sections of frms’
Web sites. Our data collection method is consistent with that of Hope (2003, p. 10) and
Elsayed and Hoque (2010). We read through these sources to track the disclosure or
availability of the research variables provided by the frms. We visited and identifed
listed frms from Bahrain Bourse, Kuwait Stock Exchange, Muscat Securities Market,
Qatar Exchange, Dubai Financial Market and Abu Dhabi Stock Exchange in the United
Arab Emirates, and Tadawul in Saudi Arabia. While at the Web sites, we looked for the
“listed companies/securities” pages. We identifed an initial sample of 658 frms from
these stock exchanges. We placed restrictions for frms to be qualifed for inclusion in a
fnal sample. For frms to be included in the qualifying sample, we required that they
must:
• publish their annual reports and accounts in English;
• have a complete, functioning and active English version of their Web sites (those
still under construction were not considered);
• have management and/or director information in their annual reports and
accounts or in the about us, investors’ relations or the contact us sections of their
Web site; and
• be publicly quoted and trading on a stock exchange in the region.
These conditions reduced the initial 658 frms to 403, which were eventually used for the
analysis. The sample composition is contained in Table I.
4.2 Dependent, independent and control variables
The dependent, independent and control variables are identifed from the regression
equation:
Table I.
Distribution of frms by
country
Country
Number of frms
initially identifed
Number of
frms discarded
Number of frms used
in the analyses
Bahrain 45 11 34
Kuwait 202 87 115
Oman 153 58 95
Qatar 43 8 38
Saudi Arabia 150 75 75
United Arab Emirates 65 16 49
Total 658 255 403
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?
ID ? ?
?
? B
1
CEO
?
CHAIR ? B
2
AGE ? B
3
PARTY
? B
4
CO
?
GOV ? B
5
LnSIZE ? B
6
INDTY ? ?
(1)
We predict positive signs (?) for B
1
, B
2
, B
4
and B
5
, and a negative sign (–) for B
3
. We
are unable to predict a sign for B
6
.
Data and variables are defned in Table II.
4.2.1 Dependent variable. Our dependent variable is ?ID. ?ID conveniently
aggregates the three sets of manager details into one summary measure. The
information sets include:
• contact details;
• ability/maturity details; and
• responsibility details.
We use contact detail to proxy managers’ direct telephone numbers and direct e-mail
addresses; ability/maturity detail is proxied by managers’ ages, levels of education,
Table II.
Variables and defnitions
?ID??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY?B
4
CO
?
GOV?B
5
LnSIZE ?B
6
INDTY??
Dependent variable
Our dependent variable is ?ID. ?IDconsists of three information sets, namely, contact details,
ability/maturity details and responsibility details. In this paper, contact detail is proxied by a manager’s
direct telephone numbers and direct e-mail addresses; ability/maturity is proxied by a manager’s age,
level of education, experiences and previous employments. Amanager’s level of responsibility is proxied
by a manager’s marital status. Age can proxy both responsibility and maturity
We code the dependent variable as 1 where they are disclosed in our data sources and 0 otherwise
Independent variables
CEO_CHAIR is where the same individual occupies the offce of chairman and that of chief executive
offcer at the same time. CEO_CHAIR is coded 1 where the same person occupies the offce of chairman
and that of chief executive offcer at the same time (Bowen et al., 2008; Dechowet al., 1996; Armstrong and
Larcker, 2009; Jain et al., 2010; Adawi and Rwegasira, 2011; Rezaee, 2005)
AGE is the number of years since the frmwas founded (Karpoff et al., 2008a, 2008b; Ghosh, 2007;
Burgstahler et al., 2006)
PARTYbroadly describes any relationship(s), fnancial or otherwise, including stock ownership (wholly
or in part) between a frmand the state. The relationship also includes being a state-run enterprise, an
enterprise of a state-run enterprise, an enterprise having government appointees on the Board and other
connections between the state and the frm, other than for tax or regulatory purposes. PARTYis dummy
variable coded 1, where a frmhas no relationship with the state and 0 otherwise (Bushman et al., 2004;
Aljifri and Moustafa, 2007; Ghosh, 2007)
CO_GOVis a set of Principles of Corporate Governance issued by capital market regulators of a country.
Firms are required in their annual reports and accounts to explicitly declare whether or not they comply
with the principles. We score 1 for frms that disclose this information and 0 otherwise
Control variables
LnSIZE is used to measure the size of a frm. LnSIZE is measured as the natural logarithmof total assets
(Adawi and Rwegasira, 2011; Hope, 2003; Elsayed and Hoque, 2010; Bowen et al., 2008)
INDTYclassifes frms according to the industry they belong (Hope, 2003; Elsayed and Hoque, 2010). See
Table III for the classifcations used in the paper
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experiences and previous employments. Managers’ level of responsibility is proxied by
their marital statuses[5]. We score frms as 1 where they disclose each itemof managers’
identity and 0 otherwise.
4.2.2 Independent variables. Our independent variables include separation of offce of
chairman from that of chief executive offcer (CEO_CHAIR), frms’ ages (AGE), frms’
relationship with the state (PARTY) and frms’ declaration that they comply with the
Principles of Corporate Governance (CO_GOV)[6]. CEO_CHAIRtakes the value of 1 where
the offce of chairmanis separate fromthat of chief executive offcer and0 otherwise. AGEis
the number of years since the frm was founded up to 2010. AGE is a proxy for maturity.
PARTYis the relationship that a frmhas or does not have with the state. PARTYis coded
1 where a frmis related to the state and 0 otherwise. CO_GOVis a statement of compliance
withPrinciples of Corporate Governance. We score frms 1 for disclosingthat theyadhere to
the Principles and 0 otherwise.
4.2.3 Control variables. To capture potentially omitted variables, we introduce frm-
and industry-specifc controls, which are, respectively, frm size (LnSIZE) and
industry-type (INDTY). Below, we motivate the choice and inclusion of these variables.
Prior literature has used size and industry type as controls, and we discuss thembriefy.
Ruland et al. (2007, p. 100) advise that it is still necessary to control for systematic
differences across frms such as frm size and industry type.
4.2.3.1 Firm size. Bushman et al. (2004, Table VI, Panel F) show that frm size is an
important variable for fnancial transparency. They fnd that fnancial transparency is
signifcantly higher for large frms. Hassan et al. (2006) investigate the relationship between
frmcharacteristics and the voluntary disclosure levels of non-fnancial companies listed on
the Egyptian Stock Exchange. Their fnding indicates a positive relationship between the
extent of voluntary disclosure and frmsize. Hope (2003, p. 229) argues that the demand for
informationis larger for larger frms. Adawi andRwegasira (2011) fndthat size is one of the
mainfactors that increases effectiveness of a corporate boardinvoluntarilypromotinggood
practice indisclosure. Takentogether, these prior studies suggest that frmsize is positively
associated with disclosure. We follow Hope (2003), Elsayed and Hoque (2010) and Bowen
et al. (2008) in using the natural logarithmof total assets to proxy frmsize.
4.2.3.2 Industry type. Prior studies report mixed result on industry membership. Hope
(2003, p. 233), who did not tabulate his results, fnds that industry membership is an
important explanatory factor for disclosure levels. However, Elsayed and Hoque’s (2010)
fnding suggests that industry type has little or no signifcant infuence on the level of
voluntary disclosure practice. In this paper, we use industry type (INDTY) to classify frms
according to the industry they belong. We compute the number and percentage of frms in
each industry classifcation defned in the study. These are presented in Table III, Panels A
and B. Panel Ashows that industrial frms constitute the highest percentage (about 27 per
cent) of the sample, followedbyreal estate (13per cent) frms, thenother services (12per cent)
not relatedto fnancial services or anyof the listedcategories. Agricultural sector appears to
be the lowest represented (about 8 per cent).
5. Results
5.1 Descriptive
The descriptives of the variables are contained in Table IV. The table shows that mean
(standard deviation) of disclosure of managers’ identity (?ID) is 1.166 (1.426). Mean
159
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(
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(standard deviation) of CEO_CHAIR is 0.499 (0.501). Mean (standard deviation) of AGE
is 24.605 (14.627).
The youngest (oldest) frm is 2 (59) years since it was founded. Mean (standard
deviation) of PARTYis 0.385 (0.487). CO_GOVhas a mean (standard deviation) of 0.460
(0.499). Mean (standard deviation) of LnSIZE is 20.140 (2.230), with maximum
(minimum) of 14.73 (25.54).
5.2 Univariate correlation analyses
Pearson (Spearman) correlations below (above) the diagonal (full sample) are presented
in Table V; p-values are italicized and in bracket in the table. We use Pearson
Table III.
Distribution of frms by
industry type and country
Panel A Panel B
Industry type Code
Number
of frms Per cent Bahrain Kuwait Oman Qatar
Saudi
Arabia UAE
Banking 1 42 10.40 5 8 5 5 9 10
Insurance 2 43 10.67 4 7 10 4 9 9
Other services 3 47 12.00 2 10 17 4 8 6
Financial services 4 39 9.68 1 19 8 3 4 4
Agriculture 5 34 8.40 3 7 10 5 5 4
Real estate 6 52 13.00 7 17 11 5 8 4
Hotel 7 37 9.18 5 16 4 4 4 4
Industrial 8 109 27.00 7 31 30 5 28 8
403 100 34 115 95 35 75 49
Table IV.
Descriptives of dependent,
independent and control
variables
N Mean SD Minimum Maximum Median
?ID 403 1.166 1.426 0 5 0
Independent variables
CEO_CHAIR 403 0.499 0.501 0 1 0
AGE 403 24.605 14.627 2 59 25
PARTY 403 0.385 0.487 0 1 0
CO_GOV 403 0.460 0.499 0 1 0
Control variables
LnSIZE 403 20.140 2.230 14.73 25.54 20
INDTY 403 5.057 2.477 1 8 5
Notes: Dependent variable, ?ID, is the sumof managers’ direct email address, telephone number, age,
work experience, previous employment details, level of education, and marital status; frm-specifc
variables are CEO_CHAIR, a dummy variable coded 1 where the offce of chairman is separate from
that of chief executive offcer and 0 otherwise; AGE is number of years since the frm was established;
PARTY, a dummy variable coded 1where the state has relationship with the frm and 0 otherwise;
CO_GOVis a dummyvariable coded1 (0) where a frmdiscloses (does not disclose) that it complies with
the corporate governance code applicable in the market where it is listed country; control variables are:
LnSIZE, which is the natural log of total assets; and INDTY, which is the industry to which frms
belong: 1 ?Banking, 2 ?Insurance, 3 ?Other services, 4 ?Financial services, 5 ?Agriculture, 6 ?
Real estate, 7 ?Hotel and 8 ?Industrial
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Table V.
Pearson (Spearman)
correlations matrix below
(above) the diagonal (full
sample)
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161
Firm-specifc
characteristics
D
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(
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)
correlations to analyze the relationships among the variables. The dependent variable
(?ID) is signifcant and positively correlated with all our test variables (CEO_CHAIR,
AGE, PARTY and CO_GOV). Specifcally (?ID) is correlated at 0.176 with
CEO_CHAIR. ?ID is also correlated at 0.145 with AGE and is correlated (0.140) with
PARTY. The correlation between ?ID and CO_GOV is 0.360. Of the two control
variables, frm size (LnSIZE) is signifcantly correlated with ?ID, while INDTY is not
signifcantly correlated with ?ID. Our test variables have the predicted signs, except for
PARTY, which has the opposite predicted sign.
5.3 Multicollinearity
Multicollinearity does not appear to be a problem as all variance infation factors are ?
1.2 for both test and control variables. The Pearson (Spearman) correlation coeffcients
among the test and control variables did not exceed 0.170 (0.173), which was between
CO_GOV and LnSIZE.
5.4 Multiple regression analyses
We begin our empirical examination of the relationship between the dependent and
independent variables. Managers’ identity is regressed against the test and control
variables. See equation (1) in section 4.2 for the multiple regression equation. The result
of the regressions is presented in Table VI. In the table, standardized coeffcients
and t-values are in the top rows of each cell, while signifcant p-values are italicized
and in the bottom rows. Model 1 regresses managers’ identity on only the test
variables. Model 2 regresses managers’ identity on the test variables and frm size
(LnSIZE). Model 3 regresses managers’ identity on the test variables and industry-type
(INDTY). Model 4 regresses managers’ identity on all the variables, test and control.
Model 4 can be called the Full Model. We test against the alternative hypotheses. We test
H1, which posits that separating the offce of chairman from that of chief executive
offcer is more likely to increase managers’ identity disclosure. As shown in Table VI,
the coeffcients of CEO_CHAIRare positive and statistically signifcant ( p ?0.01) in all
the four models. This is consistent with our expectation and provides support for H1.
Our result is consistent with that of Jain et al. (2010) who fnd that frms whose chief
executive offcer also serves as chairman of the board experience more signifcant
negative stock price changes. H2 posits that mature frms are more likely to disclose
their managers’ identity. Maturity is proxied by frmage, AGE. The coeffcients of AGE
are positive in all the models, and they are statistically signifcant at conventional levels.
In Models 2 and 4, AGEis statistically signifcant at the 5 per cent level, while in Models
1 and 3, it is signifcant at the 0.01 level. This provides support for H2. Our fnding is
inconsistent with that of Burgstahler et al. (2006, p. 1003), who fnd that frm age is not
signifcantly related to aggregate earnings management. The test for H3 is positive and
signifcant at conventional levels in all the models (p ?0.01 and p ?0.05).
This indicates that frms that are related to the state are more likely to disclose their
managers’ identity. This fnding is contrary to expectation which states that frms that
are related to the state are less likely to disclose their managers’ identity. Our result
appears to be inconsistent with Elsayed and Hoque (2010) who fnd that
government-owned listed companies disclose less information in their annual reports
than privately owned listed companies. The test for H4 is positive and signifcant in all
the models ( p ? 0.01, p ? 0.05). This result suggests that frms’ declaration that they
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comply with the Principles of Corporate Governance can induce them to disclose their
managers’ identity. Our result is consistent with that of Haniffa and Cooke (2002), who
fnd a signifcant association between corporate governance and the extent of voluntary
disclosure in Malaysia.
The regressions in Table VI control for two potentially omitted variables, frm size
(LnSIZE) and industry-type (INDTY). The coeffcients of LnSIZE are positive and
statistically signifcant at conventional levels (p ?0.000) in Model 2 and the Full Model.
This result is consistent with that of Hassan et al. (2006), who investigated the
Table VI.
Multivariate analysis of
impact of frm-specifc
characteristics on
managers’ identity
disclosure
?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ?B
6
INDTY ??
Variable
Predicted
sign
Model 1 Model 2 Model 3 Model 4
coeffcient t coeffcient t coeffcient t coeffcient t
Intercept ? ?0.055 ?0.355 ?1.236 ?2.074 0.185 0.938 ?0.919 ?1.484
p-value (0.723) (0.039) (0.349) (0.139)
Firm-specifc variables
CEO_CHAIR (?) 0.219 4.791 0.233 5.065 0.232 5.045 0.244 5.271
p-value (0.000) (0.000) (0.000) (0.000)
AGE (?) 0.112 2.479 0.096 2.115 0.112 2.498 0.098 2.158
p-value (0.014) (0.035) (0.013) (0.032)
PARTY (?) 0.115 2.563 0.111 2.487 0.108 2.424 0.105 2.366
p-value (0.011) (0.013) (0.016) (0.018)
CO_GOV (?) 0.389 8.593 0.376 8.251 0.395 8.732 0.382 8.388
p-value (0.000) (0.000) (0.000) (0.000)
Control variables
LnSIZE (?) 0.094 2.052 0.087 1.880
p-value (0.041) (0.061)
INDTY ? ?0.089 ?1.990 ?0.082 ?1.812
p-value (0.047) (0.071)
Number of
observations
403 403 403 403
Adjusted R
2
0.203 0.210 0.209 0.226
Model 1: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ??
Model 2: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ??
Model 3: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE ??
Model 4: ?ID ??
?
?B
1
CEO
?
CHAIR ?B
2
AGE ?B
3
PARTY ?B
4
CO
?
GOV ?B
5
LnSIZE
?B
6
INDTY ??
Notes: Dependent variable, ?ID, is the sumof managers’ direct email address, telephone number, age,
work experience, previous employment details, level of education, and marital status. Firm-specifc
variables are CEO_CHAIR, a dummy variable coded 1 where the offce of chairman is separate from
that of chief executive offcer and 0 otherwise; AGE is number of years since the frm was established;
PARTY, a dummy variable coded 1where the state has relationship with the frm and 0 otherwise;
CO_GOVis a dummy variable coded 1 (0) where a frmdiscloses (does not disclose) that it complies with
the corporate governance code applicable in the market where it is listed country; control variables are:
LnSIZE, which is natural log of total assets; and INDTY, which is the industry to which frms belong:
1?Banking, 2 ?Insurance, 3 ?Other services, 4 ?Financial services, 5 ?Agriculture, 6 ?Real estate,
7 ?Hotel and 8 ?Industrial.
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relationship between frm characteristics and the voluntary disclosure levels of
non-fnancial companies listed on the Egyptian Stock Exchange, and found a positive
relationship between the extent of voluntary disclosure and frm size. We have no
prediction for industry-type; however, it appears to have a statistically negative
non-signifcant effect on managers’ identity disclosure. This result is consistent with
Elsayed and Hoque (2010), who fnd that industry-type is not statistically signifcantly
related to the level of voluntary disclosure. The adjusted R
2
s of all the models are close,
in the range of 20-23 per cent. The Full Model shows that the independent variables
explain about 23 per cent of the variation in managers’ identity disclosure. The R
2
s
reported in our paper are comparable to the 27.2 per cent reported by Adawi and
Rwegasira (2011).
5.5 Additional analysis
In the original version of the paper, the power of our tests was low; the (untabulated)
result indicates a range of 6-8 per cent. To gain more power, an additional test variable,
CO-GOV, was included in re-estimated multiple regression models. Our results on the
initial/frst three test variables remain substantially unchanged by the test; however, in
the additional tests we gain more power as the adjusted R
2
s increase to between 20 and
23 per cent. In addition, the test result on CO-GOV was as predicted and statistically
signifcant. In sum, the additional tests increase our confdence in the validity of our
fndings[7].
6. Conclusions
In this paper, we examine the impact of frm-specifc characteristics on disclosure of
managers’ identity by frms in the GCC region. In particular, we examine what impact
separating the offce of chairman from that of chief executive offcer, maturity of frms,
frms’ relationship with the state and frms’ declaration that they comply with the
Principles of Corporate Governance have on manager’s identity disclosure. The research
sampled 403 listed frms drawn fromthe seven stock exchanges in the GCCregion. Little
is known in the literature about the disclosure of managers’ identity in the region. A
perusal of annual reports of frms in the region reveals that biodata of managers in the
region are lacking. This is unlike in Europe or in the USAwhere one can readily extract
this information from frms’ annual reports and other frms’ sources.
We test four hypotheses in the study. H1 posits that separating offce of chairman
from that of chief executive offcer is likely to lead to increased disclosure of managers’
identity. The test results in all the regression models (Table VI) are positive and
statistically signifcant (p ? 0.00). This fnding is consistent with our expectation
and provides support for H1. Our result is consistent with that of Jain et al. (2010) who
fnd that frms who have their chief executive offcer serving as chairman of the board
experience more signifcant negative stock price changes. The coeffcient of AGE is
positive and statistically signifcant at the 5 per cent level for the Full Model (p ?0.032).
This fnding provides support for H2 which states that mature frms are more likely to
their disclose managers’ identity. The sign for the third hypothesis is contrary to
expectation. The test for H3 shows that the coeffcients of PARTY are positive and
signifcant in all the models. This indicates that frms that are related to the state are
more likely to disclose their managers’ identity, contrary to expectation. The test for H4
indicates that the coeffcients of CO_GOV are positive and signifcant in all the models.
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This suggests that the declaration by frms that they comply with the Principles of
Corporate Governance can induce them to increase managers’ identity disclosure. Our
fnding is consistent with Haniffa and Cooke (2002), who investigated the relationship
between corporate governance and the extent of voluntary disclosure and found a
signifcant association between corporate governance and the extent of voluntary
disclosure.
The test fnds a positive association between frm size and manager’s identity
disclosure, consistent with prior research. Hassan et al. (2006) investigated the
relationship between frm characteristics and the voluntary disclosure levels of
non-fnancial companies listed on the Egyptian Stock Exchange and found a positive
relationship between the extent of voluntary disclosure and frm size. Adawi and
Rwegasira (2011) found frm size to be one of the main factors that increase the
effectiveness of a corporate board in voluntarily promoting good practice in disclosure.
The level of statistical signifcance of the test is mixed, as the Full Model is not
statistically signifcant. Industry-type (INDTY) appears to have a negative association
with managers’ identity disclosure. In the Full Model, INDTY is not statistically
signifcant. This fnding is consistent with Elsayed and Hoque (2010), who fnd that
industry type is not statistically signifcantly related to the level of voluntary disclosure.
In sum, this suggests that industry type has no signifcant impact on disclosure of
managers’ identity. The predictor variables explain between 20 and 23 per cent of the
variation in managers’ identity disclosure in the GCCregion. Specifcally, the Full Model
explains about 23 per cent of the variation in managers’ identity disclosure.
Our paper makes at least two contributions to the disclosure literature. First, our
paper is the frst study on the GCC region that examines the relation between
frm-specifc characteristics and managers’ identity disclosure. We also contribute to the
literature by increasing our understanding of voluntary disclosure practices in the GCC
region. Thus, our results give some insights into frms’ disclosure practice in an
environment with mandatory corporate governance.
This paper has some practical implications. The paper has the potential to infuence
frms in the GCC region to begin disclosing their managers’ identity, including personal
details and other contact information. In addition, there is the prospect that market
regulators in the GCC region and other emerging markets who may read this research
may begin to require frms to disclose their managers’ identity.
Two limitations bedevil this study. The frst is the study’s convenient classifcation
of frms into industries, which is as a result of different classifcation schemes used by
the seven stock exchanges in the region. For example, Saudi Arabia’s stock exchange
(Tadawul) has the “deepest” classifcation. It classifes companies into industries such
as banks and fnancial services, petrochemical industries, retail, cement, energy and
utilities, real estate development, agriculture and food industries, insurance,
telecommunication and information technology, building and construction,
multi-investment, industrial investment, transportation, media and publishing and
hotel and tourism. In the United Arab Emirates, there are no industry classifcations for
frms listed on either Abu Dhabi Stock Exchange or Dubai Financial Market. Oman
classifes its companies into fnancial, industrial and service industries. Doha Stock
Exchange classifes frm into banks and fnancial services, consumer goods and
services, industrials, insurance, real estate, telecoms and transportation. Companies
listed on the Bahrain Bourse are distributed into commercial bank, investment, services,
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insurance, industrial, hotels and tourism, etc. Kuwait Stock Exchange classifes frms
into oil and gas, basic materials, industrial, consumer goods, healthcare, consumer
services, banks, telecommunications, utilities, insurance, real estate, fnancial services,
investment instrument, technology and parallel. We would like to suggest the need for a
uniform classifcation of companies by the stock exchanges in the GCC region. The
study’s second limitation is the use of only 2010 annual reports and accounts. As GCC
markets are evolving, it will be interesting to capture the state of disclosure of managers’
identity after 2010.
Notes
1. In this paper, our construct of a manager includes persons occupying management or
executive positions, who can be called Chief Executive Offcer, President, General Manager,
Managing Director, Chairman and other equivalent appellations.
2. We use managers’ identity to connote information about the identity, biodata or profle of
managers of publicly quoted frms. The proxies for managers’ identity are defned in Table II:
variables and defnitions.
3. Source: See Arab Monetary Fund quarterly bulletin reports at www.amf.org.ae/
4. We thank one of the anonymous reviewers who suggested an additional test. The process of
implementing the test has led to the inclusion of this hypothesis.
5. Age canalso proxyresponsibility, but that is irrelevant so longas it is includedinaggregating
managers’ identity.
6. We once again thank one of the anonymous reviewers who suggested an additional test, the
process of which led to the inclusion of this variable.
7. We are grateful to an anonymous reviewer who suggested we run an additional test. The
process has led to the inclusion of CO_GOV variable.
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About the author
The author was, until recently, an Assistant Professor of Accounting and Finance at the College
of Business, American University in the Emirates, Dubai, United Arab Emirates, where he taught
accounting and fnance courses. He is now with the Federal University, Otuoke, Bayelsa State,
Nigeria, where lectures courses in the same areas.
To purchase reprints of this article please e-mail: [email protected]
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