The Impact of the Level of Capital Adequacy and Related Risk Management Disclosure on The Value of Commercial Bank- An Empirical Study on Egyptian Listed Commercial Banks

Saleh, Nermin Mohamed Shaker Ibrahim; Ali, Abd Elwahab Nasr

doi:10.21608/aljalexu.2021.186495

The Impact of the Level of Capital Adequacy and Related Risk Management Disclosure on The Value of Commercial Bank- An Empirical Study on Egyptian Listed Commercial Banks

Document Type : Original Article

Authors

¹ Accounting Department Faculty of Commerce Damnhour University Damnhour Egypt

² Professor of Accounting and Auditing, Faculty of Commerce Alexandria University Egypt

10.21608/aljalexu.2021.186495

Abstract

The research aimed to study and test the impact of the level of actual disclosure of capital adequacy and Related risk management, in accordance with Basel III, on the actual value of commercial banks listed on the Egyptian Stock Exchange.
The study also concluded in its theoretical part that disclosure of capital adequacy and related risk management increases transparency and reduces information asymmetry, which contributes to improving the quality of the bank's financial reports, and then influencing the investor's evaluation of the bank when making an investment decision and thus improving the quality of the decision Investment, It also affects the accuracy of financial analysts' forecasts, which in turn affects the bank's share price.
The study concluded, in itsempirical part, that there is a negative impact of the actual level of disclosure of capital adequacy and Related risk management on the value of Egyptian commercial banks listed on the stock exchange measured by Tobin’s Q. This differs with what most previous studies have found of the existence of a positive effect of capital adequacy disclosure and related risk management on the value of banks. The negative relationship is considered logical in the Egyptian environment, given that the Egyptian market is an inefficient market. Consequently, the bank’s share price is not determined by the level of non-financial disclosure in general, particularly capital adequacy and related risk management, but rather is determined on the basis of a large number of factors, the most important of which are profitability and dividends, and bad loans Rate.

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