The Moderating Effect of Family Ownership Concentration Between Board of Directors Effectiveness and Risk Management Disclosure in Palestine Stock Exchange

Abstract

This study examines the impact of Board of Directors Effectiveness (BODE) on Risk Management Disclosure (RMD) in financial firms listed on the Palestine Stock Exchange (PSE). It also explores the moderating role of Family Ownership Concentration (FOC) in shaping the relationship between BODE and RMD. The study is based on a sample of 13 financial firms, including six banks and seven insurance firms, listed on the PSE from 2012 to 2023. Using panel data analysis, the research investigates how board characteristics contribute to RMD and how ownership concentration alters this relationship. Findings indicate a positive relationship between BODE and RMD, with larger board size, independent directors, board experience, gender diversity, and frequent board meetings enhancing disclosure. However, ethnic diversity did not show a significant impact on RMD. The results also highlight the moderating effect of FOC, where lower ownership concentration, coupled with strong board governance, leads to improved risk disclosure. These findings have important implications for stakeholders, policymakers, and regulatory bodies. Strengthening board effectiveness and balancing ownership structures can enhance transparency, reduce agency and financing costs, and improve investor confidence. This paper emphasizes the need for regulatory improvements, particularly in governance frameworks, to enhance risk disclosure practices in developing economies. This study contributes to the literature on accounting and corporate governance by highlighting the role of family ownership in influencing RMD. The insights provide a foundation for refining governance policies and optimizing board structures to improve risk transparency. The findings are particularly relevant for countries with similar socio-economic and regulatory conditions, such as Iraq, Syria, Lebanon, and Yemen.

Conflict of Interest Disclosure: Murad Ali Ahmad Al-Zaqeba, a co-author of this article, serves as Editor-in-Chief of this journal. This relationship is disclosed here in the interest of editorial transparency.