The impact of corporate governance and risk governance on future earnings predictability in banks

Abstract

Purpose: The main aim of this research is to analyze the effect on the independent variables which is Risk Governance and Corporate Governance on the dependent variable which is Future Earnings Predictability. Data/methodology/Approach: The data that have been collected are secondary (quantitative) data, as these data was gathered from financial statements and annual reports of the banks that are listed in Egyptian and Emirates stock market. The sample is 22 banks from 2014 to 2019. We have measured the Risk Governance with number of risk committee members and measured the Corporate Governance with CEO duality, number of board members and the percentage of independent members and measured the Future earnings predictability with Future Cash Flow (Barth model). These data analyzed through descriptive, correlation and regression analysis using statistical program called SPSS. Results: The results showed that there is a positive relationship between CEO duality and future cash flow, moreover there is a negative relationship between number of board members and future cash flow, and also there is a negative relationship between independent directors and future cash flow and there is a positive relationship between number of risk committee members and future cash flow. Limitations: The limitation of this research was, we have experienced difficulties to develop because most of the banks involved in the study have not published the financial reports for all years. Also, the quality of published annual reports was not that good even though the banks are the best in both countries. The information found in the financial reports was not complete. Most of the banks did not mention full information about the risk governance and how many members in the committee. Thus, the next researchers must take into consideration other variables.