The Effect of Corporate Governance, Dividend Policy and Informativeness of Risk Disclosure on the Firm Value: Egyptian Evidence

The purpose of this paper is to investigate the effect of corporate governance, dividend policy and the risk disclosure level on firm value and in turn, explore the main drivers of implementing corporate governance mechanisms, declaring dividend and risk disclosure within the annual reports of the Egyptian listed companies. A risk disclosure index was constructed to measure the level of the risk disclosure. Structure equation modelling has been employed to test the hypotheses using a sample of the most active 30 companies that are listed on the Egyptian Stock Exchange Market (EGX30). The findings suggest that (i) the board independence and board size have insignificant effect on the firm value, while CEO duality shows a significant positive impact on the firm value, and (ii) risk disclosure level allows investors to better predict future earnings growth. Furthermore, dividend policy and risk disclosure informativeness affect significantly the firm’s ability to raise money and its value in a positive direction. Hence, this contributes to the literature of emerging markets by providing evidence in Egypt that may highlight the magnitude of corporate governance mechanisms, risk disclosure informativeness and dividend policy and their impact on the firm value.