Dr. Heba Besheir Eltokhy Abd Elfattah :: Publications:

Research Problem Risk disclosure has become an intellectual and practical issue of great importance, not only for stakeholders but also for global communities. This heightened importance is driven by the current instability in the world and the resulting changes in consumer prices, which directly affect a company's survival and continuity, as well as its financial performance and market value. Accounting literature highlights the important role of women’s membership in the boards of directors, due to the intellectual diversity and the varied leadership skills that women bring. This diversity enhances the board's independence and constrains executives' ability to manipulate decisions, leading to greater prudence and rationality in board decisions. Ultimately, these factors improve companies' financial performance and support their market value. One study indicated that women directors are more active than their male counterparts, being more likely to serve on audit committees and to attend board meetings regularly. Women directors also introduce a collaborative approach to leadership and decision-making, which improves communication among board members and leads to better decisions and positive outcomes for companies, including improved performance and disclosure. Furthermore, the presence of female directors enriches board deliberations by providing diverse perspectives, thereby enhancing the quality of decisions made. Several factors have underscored the importance of disclosing both financial and non-financial risks. These include the increasing complexity of operations in many companies, the existing complexity in business structures, and rapid changes in global economic and regulatory environments. These factors prompted the International Accounting Standards Board (IASB) to issue IFRS 7 Financial Instruments: Disclosure, which requires companies to disclose their risks and aims to improve the transparency of accounting information. Additionally, the Basel III framework introduced in 2010, followed by the international risk management standard ISO 31000 in 2013, were instituted to improve the level of risk disclosure in order to meet stakeholders' information needs for sound investment decisions and to support company value. The level of risk disclosure significantly affects a company's financial performance and market value. Periodic and systematic disclosure of the risks a company faces, along with the complexity and interconnectedness of those risks, helps reduce information asymmetry and lowers the cost of capital. Such disclosure also improves financial analysts' forecasts of the company's cash flows and profitability. Furthermore, it enables stakeholders to make more rational investment decisions, which ultimately enhances companies' financial performance and increases their market value. Accordingly, this study addresses the following primary research question: What is the impact of women’s membership in the boards of directors on the level of risk disclosure and on firm value? To answer this question, the study examines the following sub-questions: • What is the impact of women’s membership in the boards of directors on the level of risk disclosure? • What is the impact of women’s membership in the boards of directors on firm value? • What is the impact of the level of risk disclosure on firm value? • What is the impact of women’s membership in the boards of directors on the relationship between risk disclosure level and firm value? 2. Research Objectives: This research aims to bridge a gap in the literature on risk disclosure and female board membership, an area that remains relatively unexplored. Gender diversity in corporate governance is a crucial element that can provide deeper insights in a developing economy such as Egypt. Accordingly, the main objective of this research is to examine the impact of women's membership on boards of directors on the relationship between risk disclosure level and firm value in non-financial companies listed on the Egyptian Exchange during the period 2019–2023. This overarching objective is addressed through several sub-objectives: • To examine and analyze the effect of women’s membership in the boards of directors on the level of risk disclosure. • To examine and analyze the effect of women’s membership in the boards of directors on firm value. • To examine and analyze the effect of the level of risk disclosure on firm value. • To provide empirical evidence from the Egyptian business environment regarding the impact of women’s membership in the boards of directors on the relationship between risk disclosure level and firm value in non-financial companies listed on the Egyptian Exchange. 3. Research Importance: The importance of this research lies in offering empirical evidence from the Egyptian context — an important example of a developing economy — regarding the impact of women’s membership in the boards of directors on the relationship between risk disclosure level and firm value for non-financial companies listed on the Egyptian Exchange. The findings of this study are also relevant to boards of directors, stakeholders, and professional and regulatory bodies. The research raises awareness about the importance of women’s membership in the boards of directors and its positive reflection on firm value, as well as the importance of robust risk disclosure to stakeholders. Heightened awareness of these factors can lead to fairer company valuations, improved transparency, reduced information asymmetry, and more rational investment decisions that help maximize returns. 4. Scope of the Research • Time Scope: The study covers the five-year period from 2019 to 2023. • Objective Scope: The research focuses on the impact of women’s membership in the boards of directors on the relationship between risk disclosure level and firm value, and it is limited to companies listed on the Egyptian Exchange. Financial companies and banks were excluded due to their unique characteristics and different regulatory requirements. The generalizability of the results is subject to the constraints of the study's sample and methodology. • Spatial Scope: The study is limited to companies operating in Egypt, specifically those listed on the Egyptian Exchange. 5. Research Hypotheses the research hypotheses were formulated as follows: H1: Women’s membership in the board of directors has a significant impact on the level of risk disclosure. H2: Women’s membership in the board of directors has a significant impact on firm value. H3: The level of risk disclosure has a significant impact on firm value. H4: Women’s membership in the board of directors has a significant impact on the relationship between risk disclosure level and firm value. 6. Research Plan Based on the importance of the research and to achieve its objectives and answer the research questions, the structured of the research is divided as follows: Section one presents general framework of the research, section two presents the theoretical framework of the study, section three reviews prior studies and develops the research hypotheses, section four describes the design of the empirical study and the development of the study models, section five contains the analysis and discussion of the empirical results and the testing of the research hypotheses. Finally, section six provides the conclusions, recommendations, and future research directions. 7. Results The main findings of the study can be summarized as follows: • The sample companies exhibit a low level of risk disclosure. This is true both in terms of risks discloser coverage (financial and non-financial) and the overall quantity of risk information provided. • These companies tend to focus on disclosing financial risks that the firm may face, while refraining from disclosing most non-financial risks. • There is a significant positive impact of Women’s membership in the board of directors on risk disclosure coverage, as measured by an index that captures the disclosure of various financial and non-financial risks. • There is a significant positive impact of women’s membership in the board of directors on the amount of risk disclosure, measured as the proportion of sentences in the annual report containing risk-related terms. • There is a significant positive impact of women’s membership in the board of directors on firm value. Greater gender, skill, and experience diversity on the board improves firm performance and value by bringing new perspectives and innovative approaches to problem-solving and company management. • There is a significant impact of risk disclosure coverage on firm value. • There is a significant impact of The quantity of risk disclosure on firm value. • There is a significant impact for women’s membership in the board of directors on the relationship between risk disclosure coverage and firm value (i.e., companies with women on the board gain more value from broad risk disclosure). • There is a significant impact for women’s membership in the board of directors on the relationship between the amount of risk disclosure and firm value. 8. Recommendations Based on the above findings, the researchers offer the following recommendations: • Increase awareness of the need for gender diversity on corporate boards, as a diverse board brings a wider range of ideas and perspectives to discussions and decision-making. • Encourage companies to recruit qualified women to serve on their Boards of Directors, ensuring that these appointments are based on merit (expertise and competence). • Urge accounting standard-setters and regulatory bodies in Egypt to mandate greater risk disclosure, given the currently low level of risk reporting by companies listed on the Egyptian Exchange. • Encourage companies to voluntarily disclose more information about their risks, as greater transparency can increase investor confidence and potentially enhance firm value. • Companies listed on the Egyptian Exchange should improve the level of risk disclosure in their annual reports by providing adequate and detailed information that covers both financial and non-financial risks.