Corporate governance and firm value: the mediating role of risk disclosure across sectors in an emerging market governance, risk disclosure, firm value in emerging market

Research question/issue: This Study investigates the mediating role of Risk Disclosure (RD) quantity and quality in the relationships between specific regulatory based Corporate Governance (CG) mechanisms and Firm Value (FV) measured by Tobin’s Q. The study is conducted in the emerging capital market of Jordan, comparing periods before and after the binding 2017 CG directives and testing for sectoral variations. Research findings/insights: Employing Structural Equation Modelling (SEM) and content analysis of 420 firm-year (2015–2019), this study finds that CG mechanisms collectively enhance RD but their influence on FV vary across sectors. RD positively mediates the relationship in the industrial sector but negatively in the services sector. Furthermore, while the 2017 Jordanian CG reforms succeeded in improving certain CG practices and disclosure levels, the findings indicate to a persistence of symbolic compliance, raising question whether it is a temporary adaptation to new rules or a long-term reality. Theoretical/academic implications: This study extends the CG and disclosure literature by modelling RD quantity and quality as a critical, yet sector dependent, mediator between CG and FV in an emerging market context. It provides evidence that transitioning to binding CG regulatory framework improves formal governance practices, but may also encourage symbolic compliance, with the influence on FV vary between the Industrial and services sectors. Practitioner/policy implications: These findings challenge effectiveness of uniform CG policy. Policy makers should design sector-sensitive regulatory frameworks to ensure rules translate into genuine value creation across all industries.