Corporate governance and operational risk voluntary disclosure: Evidence from Islamic banks

The objective of the present paper is to explore the impact of the mechanisms of corporate governance on the informational content of Operational Risk (OR) voluntary disclosure. The content analysis method was used to collect data on the OR disclosure from annual reports of 34 Islamic banks scattered in various countries and over a period ranging from 2008 to 2014. Using correlation and multiple regression analyses, our results show that the information disclosed on OR, especially that of quality, is considered as value-relevant for investors as they have additional information content in risk assessment of banks. Empirical results reveal the significant impact of independent directors on the OR voluntary disclosure reported information. Conversely, the concentration of the chairman and chief executive officer responsibilities on the same person reduces it. The crucial presence of monitoring bodies, particularly, the Shariah Supervisory Board and the external auditor type affect significantly the OR information that listed Islamic banks disclosure voluntarily in their annual reports.