Beyond governance norms: How board financial expertise reshapes risk disclosure in emerging markets

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Abstract

This study explores the relationship between board characteristics, specifically independence, size, and meeting frequency, and financial risk disclosure (FRD) in Saudi financial firms, focusing on the moderating role of board financial expertise. By addressing a gap in the existing literature, this study examines how financial expertise among board members influences the relationship between these governance attributes and FRD. The research was undertaken using content analysis and Hausman-Taylor estimations to mitigate endogeneity issues and ensure robust results. Based on data from 39 Saudi financial firms (117 firm-year observations) spanning 2019 to 2021, board financial expertise plays a crucial role in influencing FRD. Specifically, it highlighted that board financial expertise significantly enhances the relationship between FRD and the frequency of board meetings, indicating a positive moderating effect on FRD. These findings underscore the critical role of board members with financial expertise in enhancing the disclosure of financial risks. They suggest that optimizing board structure by incorporating financial expertise can be a strategic approach to improving FRD.

Keywords: Corporate Governance, Board of Directors, Board Financial Expertise, Board Independence, Board Size, Board Meeting Frequency, Financial Risk Disclosure, Financial Firms, Saudi Arabia

Authors’ individual contribution: Conceptualization — S.A.A.A.-D. and Y.A.A.-M.; Methodology — S.A.A.A.-D.; Data Collection — Y.A.A.-M.; Resources — S.A.A.A.-D. and Y.A.A.-M.; Writing — Original Draft — S.A.A.A.-D. and Y.A.A.-M.; Writing — Review & Editing — S.A.A.A.-D. and Y.A.A.-M.; Project Administration — S.A.A.A.-D. and Y.A.A.-M.; Funding Acquisition — S.A.A.A.-D. and Y.A.A.-M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G32, G34, M41, O53

Received: 15.04.2025
Revised: 01.09.2025; 17.11.2025
Accepted: 05.12.2025
Published online: 09.12.2025

How to cite this paper: Al-Dubai, S. A. A., & Al-Matari, Y. A. (2025). Beyond governance norms: How board financial expertise reshapes risk disclosure in emerging markets [Special issue]. Journal of Governance and Regulation, 14(4), 422–433. https://doi.org/10.22495/jgrv14i4siart18