International journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN:2313-626X

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 Volume 5, Issue 12 (December 2018), Pages: 42-58

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 Review Paper

 Title: Corporate risk disclosure practice in Saudi Arabia: Secrecy versus transparency

 Author(s): Omer Saeed Habtoor 1, *, Norsiah Ahmad 2, Mohammed Abobaker Baabbad 3, Abdullah Masood 4, Nor Raihan Mohamad 5, Mohd Hassan Che Haat 5

 Affiliation(s):

 1Department of Accounting, Community College, Northern Border University, Rafha, Saudi Arabia
 2Department of Accounting, Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, Terengganu, Malaysia
 3Department of Accounting, Faculty of Administrative Sciences, Hadhramout University, Hadhramout, Yemen
 4Department of Accounting, College of Business Administration, Northern Border University, Arar, Saudi Arabia
 5Department of Accounting, School of Maritime Business and Management, Universiti Malaysia Terengganu, Terengganu, Malaysia

 https://doi.org/10.21833/ijaas.2018.12.007

 Full Text - PDF          XML

 Abstract:

Accounting systems and corporate disclosure practices are significantly affected by legal systems and cultural environment. The vast majority of risk reporting research concentrates mainly on Western Europe and other developed countries. However, there is a clear dearth of corporate risk disclosure (CRD) studies in developing countries in general, and in the Arab region in particular. The purpose of this study is to comprehensively explore the level and content of CRD practices in a developing country with a different legal system and cultural values, namely the Kingdom of Saudi Arabia. To the best of our knowledge, no such study has been performed in Saudi Arabia. Content analysis is conducted to analyze and measure CRD in the annual reports of Saudi non-financial listed companies over the period 2008-2011. The findings highlight the role of the legal system and cultural values on CRD practices and confirm the potential conflict between secrecy as a key feature of Saudi accounting system versus transparency as a key pillar of the Islamic Accountability Framework. Consistent with transparency, as an Islamic Sharia requirement, Saudi Arabia provides a moderate level of CRD among developed and developing countries. However, the content of this level is found to be of low quality as non-financial, qualitative, past, present, or non-time-specific and neutral risk disclosures far outweigh the financial, quantitative, future, and bad risk disclosures, which could reflect the inherent secrecy and the unwillingness of Saudi companies to provide high-quality risk disclosure. The findings also reveal a steady increase in the level of CRD over the period of study with a significant variation of disclosure level among industry sectors. Overall, the results suggest that Saudi regulatory bodies and companies pay more attention to the format rather than the content of CRD. The results have implication for national and international standard-setters, policy makers, investors, and researchers to understand and improve CRD practices and its determinants in Saudi Arabia. 

 © 2018 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Corporate risk disclosure, Culture, Secrecy, Transparency, Saudi Arabia

 Article History: Received 30 May 2018, Received in revised form 25 September 2018, Accepted 29 September 2018

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2018.12.007

 Citation:

 Habtoor OS, Ahmad N, and Baabbad MA et al. (2018). Corporate risk disclosure practice in Saudi Arabia: Secrecy versus transparency. International Journal of Advanced and Applied Sciences, 5(12): 42-58

 Permanent Link:

 http://www.science-gate.com/IJAAS/2018/V5I12/Habtoor.html

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