The Effect of the Audit Committee on the Voluntary Risk Disclosure in Jordanian Commercial Banks: The Moderating Role of Family Ownership

Abstract

This study aimed to identify the impact of audit committee characteristics on voluntary risk disclosure and to discover the moderating effect of family ownership on the relationship between audit committee characteristics and voluntary risk disclosure. Its population is represented by Jordanian commercial banks registered and operating in Jordan from 2017 to 2023. Significantly, it concluded by revealing that the characteristics of the audit committee, namely, independence, experience, and committee size, obviously impact the disclosure of voluntary risk in the selected banks. However, the results made it obvious that the number of audit committee meetings did not affect the degree of voluntary risk disclosure. In addition, the results reveal that family ownership moderately affects the relationship between some audit committee characteristics and voluntary risk disclosure.

1. Introduction

Corporate governance has attracted increasing attention from practitioners and politicians following the collapse of significant corporations due to accounting errors and a failure to disclose information that accurately represented the businesses’ true financial status. A few of these failed businesses from the past ten years include WorldCom and Enron, as well as the Lehman Brothers affair that caused the financial crisis of 2008–2009 (Adu Gyamfi, 2023; Al-Najjar & Abed, 2014; Pacelli, 2016; Saggar & Singh, 2017; Talpur et al., 2018). Investor trust was put at risk after these incidents, underscoring the importance of sound corporate governance. To protect stakeholders’ and shareholders’ interests, regulators had to arrange, oversee, observe, and regulate the information that businesses disclosed (Saggar & Singh, 2019). Most scandals related to the collapse of companies were related to the lack of transparency and disclosure of important information (A. Buallay & Al-Ajmi, 2020).

Agency theory proposes that mechanisms of corporate governance, like audit committees, can align the expectations of different parties (Fama & Jensen, 1983; Lin & Hwang, 2010). Audit committees are an efficient monitoring mechanism that increases the effectiveness of corporate governance characteristics (Alqatamin, 2018). Furthermore, the ownership structure is crucial to corporate governance effectiveness. In the context of Jordan, ownership concentration is high, and the dominant business model is the family business (Abdullatif et al., 2015).

Voluntary risk disclosure consists of several aspects, including financial risk (risk related to interest rate, exchange rate, liquidity), risk of operations (like the risk related to customer dissatisfaction with product and service), risk of integrity (like the risk related to illegible acts, creative accounting, and earnings management), and strategic risks (this includes risks related to level of competition and industry) (Agyei-Mensah & Buertey, 2019; Elshandidy et al., 2022; Neifar & Jarboui, 2018; Saggar & Singh, 2017).

In Jordan, the most common business type is family controlled. The family that holds the majority stake in the business is the one that the BOD works to accommodate (Al-Lozi et al., 2017). Local studies have revealed that family control represents an important variable to consider in voluntary disclosure (Makhlouf et al., 2018; Alkurdi et al., 2019).

Previous studies that examined corporate governance’s impact on disclosure were limited, to a large extent, to developed countries, in comparison with developing countries (Elfeky, 2017).The majority of previous studies have also focused on mandatory disclosure (Alfraih, 2016; Dolinšek et al., 2014; Ebrahim & Fattah, 2015; Tsalavoutas & Dionysiou, 2014) or voluntary disclosure (W. A. W. Abdullah et al., 2015; Carvalho et al., 2017; de La Bruslerie & Gabteni, 2014) among industrial and service companies (Aljifri et al., 2014; Malak, 2014; Sartawi et al., 2014; Taleb et al., 2016).

Previous research was restricted in terms of the number of variables. Malak (2014), for instance, looked at how executive director compensation affected voluntary disclosure, whereas Al-Hadi et al. (2016) concentrated on how the governing family affected voluntary disclosure. Furthermore, Ompusunggu (2016) investigated how voluntary disclosure was impacted by ROA, ROE, and net profit margin. In their 2017 study, Tejedo-Romero, Rodrigues, and Craig looked at women’s roles on boards related to voluntary disclosure. Md Zaini et al. (2020) looked at the impact of the ownership structure on voluntary disclosure. In this sense, the new study adds to the existing literature.

This study attempts to answer the following questions:

• What are the effects of audit committee characteristics on voluntary risk disclosure of Jordanian commercial banks?
• Does family control mitigate the impact of the audit committee on Jordanian commercial banks’ voluntary risk disclosure?

This question prompted a focus on a set of objectives. The first is to determine whether the characteristics of the audit committee have an impact on enhancing voluntary risk disclosure. The second is to investigate the moderating role of family ownership in the relationship between voluntary risk disclosure and the characteristics of audit committees for disclosure. The third is to fill the relevant research gap, especially in the Jordanian context.

This paper contributes to the existing literature on several points. Firstly, corporate governance procedures, in general, and their effects on disclosure in developing nations have received little attention despite prior research emphasizing their significance and influence on disclosure. Therefore, this research examines how corporate governance practices affect financial organizations’ voluntary risk disclosure.

Secondly, multiple stakeholders find value in the current study, which provides financial organizations with insights to improve their transparency, thereby improving the public impression of these companies and making them more appealing to investors.

Third, from a practical perspective, this study is important for several stakeholders. For Jordanian commercial banks, it is important because it enlightens the decision-makers with recommendations that help improve the disclosure, which will enhance the public picture of Jordanian commercial banks and increase their attractiveness. It is important to investors because more voluntary risk disclosure helps investors to make informed decisions. This study is also important for the citizens of Jordan, as the good performance of Jordanian commercial banks helps create jobs and contributes to the economy by paying taxes and financing projects that can benefit the public. The voluntary risk disclosure in Jordan will increase transparency and make companies more attractive for investment. In addition, cases of bankruptcy will be reduced when effective corporate governance is implemented.

Finally, this study is important because it will be conducted in the financial company sector, whereas the previous studies examined disclosure among service and industrial companies (Alqatamin, 2018; Mnif Sellami & Borgi Fendri, 2017; Saggar & Singh, 2017, 2019; Sartawi et al., 2014; Md Zaini et al., 2020; Al-Najjar & Abed, 2014). Thus, it contributes to the literature by examining disclosure in this extremely important sector, including banking, which is the engine of economic growth and activities in Jordan and developing countries.

The remainder of the paper is organized as follows. The next section reviews the previous literature and develops hypotheses according to the stakeholder theory perspective. Section 3 describes the research method, followed by Section 4. The results are presented in Section 5. Concluding remarks and suggestions for further research are presented in Section 6.

2. Review of Literature and Hypothesis Development

According to the agency theory, The audit committee is considered an essential element in promoting transparency and voluntary disclosure of risks in companies through its careful supervision of financial reports and the internal control system (Alodat et al., 2023; Areiqat et al., 2021). The audit committee comprehensively reviews the financial statements, as well as risk-related information, to ensure that they reflect the reality of the company’s financial position and the potential risks it may face (Abdullatif et al., 2015; Alhosban & Al-Sharairi, 2017). This ensures that the information provided to investors and shareholders is comprehensive and factual, enhancing their trust in the company.

In contrast, family ownership plays an important role in determining how companies deal with voluntary risk disclosure (Neifar & Jarboui, 2018). In family-owned businesses, there may be an overlap between personal and corporate interests, which can affect the level of disclosure. Ownership families (Abdullatif et al., 2015) may be wary of revealing information that might negatively affect their reputation or the company’s value in the market. This may lead to reduced voluntary risk disclosure to protect family interests. However, in other cases, ownership families focused on the long-term sustainability of the company may seek to improve the level of disclosure to enhance trust and attract more investment (Karamanou & Vafeas, 2005; Lin & Hwang, 2010).

When the audit committee interacts with family ownership, the committee may face challenges in providing objective oversight due to the influence of family interests (Alqatamin, 2018; Karamanou & Vafeas, 2005; Talpur et al., 2018). There may be pressure on the audit committee to avoid disclosing information that might negatively affect the reputation of the family ownership. To achieve a balance between providing accurate and comprehensive information and protecting the family’s interests, the audit committee must remain independent and adhere to international standards. Cooperation between the audit committee (AC) and the family ownership can help in improving the process of voluntary risk disclosure by achieving a balance between transparency and protecting personal interests, which enhances the effectiveness of the disclosure process and contributes to achieving long-term benefits for the company, investors, and shareholders.

2.1. Independence of the Audit Committee

The available literature suggests that an independent AC is a relevant and necessary variable that ultimately construes the difference in discourses of corporate risk (Agyei-Mensah & Buertey, 2019). Davidson et al. (2005) stressed that problems of agency between shareholders and managers are believed to have lower levels in firms with independent ACs. This is stressed by (Mangena & Chamisa, 2008; Karamanou & Vafeas, 2005), who hypothesize that an independent audit committee can oppose management influence, as well as advocate for the release of information to the capital markets to lessen information asymmetries.

A positive link joining the independence of an audit committee with voluntary disclosure is found in (A. Buallay & Al-Ajmi, 2020; Elshandidy et al., 2022; Mnif Sellami & Borgi Fendri, 2017; Talpur et al., 2018). Thus, this study hypothesizes that the link joining the independence of an AC with voluntary risk disclosure is positive.

H1a. 

There is a statistically significant effect of the independent AC on voluntary risk disclosure in Jordanian commercial banks.

2.2. Experience of the Audit Committee

Experience in auditing is crucial for the audit committee, as it helps in understanding and overseeing the company’s financial reporting system (W. A. W. Abdullah et al., 2015). The findings of related studies are mixed regarding the link joining the experience of the audit committee with disclosure.

Venturelli et al. (2019) showed that AC experience has a negative link with voluntary disclosure in the UK and Italy, whereas Alkurdi et al. (2019) indicated a positive link joining AC with voluntary disclosure in Jordan. Accordingly, the present paper hypothesizes the following:

H1b. 

The experience of the AC significantly affects voluntary risk disclosure in Jordanian commercial banks.

2.3. Number of AC Meetings (NACMs)

The number of AC meetings refers to the frequency of audit committee meetings every year. In a study conducted by Allegrini and Greco (2013), they found that the NACMs have a positive and significant link with voluntary disclosure levels among Italian public listed companies. However, K. Abdullah and Ahmad (2010) unveiled no obvious link between such variables and the compliance level with disclosure in Malaysia. Similar findings were derived by (Madi et al., 2017; Mnif Sellami & Borgi Fendri, 2017), and (Neifar & Jarboui, 2018) found that ownership concentration is high; a positive link is expected between audit committee meetings and the degree of voluntary risk disclosure. Accordingly, this study hypothesizes the following:

H1c. 

The number of AC meetings significantly affects voluntary risk disclosure in Jordanian commercial banks.

2.4. The Audit Committee’s Size

This can have a critical role in the disclosure level (Ashfaq & Rui, 2019; Mnif Sellami & Borgi Fendri, 2017). We came to the same conclusion as Madi (2022) on the importance of the AC’s size in increasing the degree of voluntary disclosure and lowering the asymmetry issue brought on by agency theory. Albitar (2015) supports this point, whereas Basah (2015) posits that such a variable has an insignificant relationship with the voluntary disclosure level. Audit committee size enhances the ability of the committee to monitor and present high-quality information (A. Buallay & Al-Ajmi, 2020; A. M. Buallay et al., 2019; Al-Musali et al., 2019). Therefore, this study assumes the following:

H1d. 

The audit committee size significantly affects voluntary risk disclosure in Jordanian commercial banks.

2.5. Moderating Effect of Family Control

Family ownership dominates Jordanian business, and families own a high percentage of companies (Al Sawalqa, 2014). In Kuwait, the study of Alfraih (2016) indicated that the increase in family ownership has a negative link with voluntary disclosure. Sartawi et al. (2014) indicated that companies owned by families tend to disclose less information in the context of Jordan. The increase in the combination of family ownership, control, and management can shape the BODs’ decisions on voluntary disclosure. Nevertheless, the companies owned by families limit their disclosure to the MD (Md Zaini et al., 2020). Also, a positive link joining family ownership with disclosure was found (Saggar & Singh, 2017) in Indian listed companies. Previous studies in Jordan suggested that family control or ownership plays an obvious role in voluntary disclosure and shapes the decision of the BOD, audit committee, and CEO (Makhlouf et al., 2017). For this reason, previous studies suggested studying the family ownership’s moderating role (Alkurdi et al., 2019; Makhlouf et al., 2017). In this context, several previous studies revealed that family ownership moderately affects voluntary disclosure. Akhtaruddin et al. (2009) found that family control with the audit committee negatively affects voluntary disclosure. Muttakin and Subramaniam (2015) pointed out that in family controlled firms, there is less need to report on voluntary disclosure. Thus, the hypothesis below is proposed.

H2. 

Family ownership affects the AC characteristics on voluntary risk disclosure in Jordanian commercial banks.

3. Methodology

This study is considered a quantitative study, as it mainly relies on numerical and statistical data to analyze the relationship between different variables. Various statistical methods, including descriptive analysis, model fit tests, and tests of hypothesis, were used to examine the effects and relationships between voluntary risk disclosure, audit committee characteristics, and family control in the selected banks.

3.1. Population and Sample

The Jordanian commercial banks registered and operating in Jordan during the period from 2017 to 2023 represent the research population. The year 2017 was chosen as the beginning of the study period because it represents an important turning point in the Jordanian economy, as the country began implementing major economic reforms aimed at enhancing financial stability and adapting to local and international challenges. The availability of reliable financial and non-financial data for commercial banks during this period makes it suitable for analysis, allowing for a comprehensive assessment of banks’ performance in light of these transformations. In addition, the relative stability of the Jordanian financial market since 2017 reflects a favorable environment for a more accurate and objective analysis of banks’ financial indicators.

For this study, a sample of these banks was selected according to specific criteria that ensure an appropriate and comprehensive representation of the study population. The main selection criteria included the availability of complete financial and non-financial data available for study during the selected period.

3.2. Measurement of Variables

3.2.1. Dependent Variable

Voluntary Risk Disclosure: The index was measured as a percentage of the actual disclosed information divided by the total possible disclosure. The formula is given as follows:

$$\mathrm{D}\mathrm{i}\mathrm{s}\mathrm{c}\mathrm{l}\mathrm{o}\mathrm{u}\mathrm{r}\mathrm{e} \mathrm{I}\mathrm{n}\mathrm{d}\mathrm{e}\mathrm{x}={\displaystyle \frac{\mathrm{A}\mathrm{c}\mathrm{t}\mathrm{u}\mathrm{a}\mathrm{l} \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{c}\mathrm{l}\mathrm{o}\mathrm{s}\mathrm{u}\mathrm{r}\mathrm{e}}{\mathrm{T}\mathrm{o}\mathrm{t}\mathrm{s}\mathrm{l} \mathrm{D}\mathrm{i}\mathrm{s}\mathrm{c}\mathrm{l}\mathrm{o}\mathrm{s}\mathrm{u}\mathrm{r}\mathrm{e}}}={\displaystyle \frac{{\sum }_1^{\mathrm{m}}\mathrm{d}\mathrm{i}}{{\sum }_1^{\mathrm{n}}{\mathrm{d}\mathrm{i}}^1}}$$

where di = 1 if the item is disclosed and zero if not disclosed; m = number of items disclosed; n = maximum number of disclosure items possible.

3.2.2. Independent Variable

The independent variables are being measured as follows in

Table 1. Independent Variable.

Variable		Measurement
The AC Independence	IND	measured as the percentage of independent audit committee members divided by the total number of audit committee members
The AC Experience	EXP	takes a value of 1 if all audit committee members are qualified (holding an undergraduate degree in accounting or finance) and at least one of them has an accounting professional qualification (as specified in the CG code for Jordan), and takes a value of 0 otherwise
Number of AC Meetings	MEET	measured as the number of meetings of the audit committee held during a full year
Size of the AC	SIZE	audit committee size is measured using the number of audit committee members reported in the firm’s annual financial reports
Family Control	FO	measured using the percentage of 5 percent or more of shares held by a family

.

4. Result

This section includes the results related to the statistical analysis and includes descriptive measures. The statistical treatment is based on the financial and non-financial data related to the selected banks for seven years, from 2017 to 2023.

4.1. Descriptive Statistics

The dependent variable represents the voluntary risk disclosure, while the independent variable represents the characteristics of the AC, which are the independence, experience, number of meetings, and size of the AC, while the moderating variable is represented by family ownership in the selected banks during (2017–2023).

Table 2. Statistics of voluntary risk disclosure, characteristics of the audit committee, and family ownership in the selected banks for (2017–2023).

Variables	Measure
	Mean	Max	Min	Stdev.
DRISK	0.566	0.793	0.172	0.122
IND	0.887	1.0	0.333	0.169
EXP	1.476	8.0	0.0	1.936
MEET	7.405	19.0	4.0	2.319
SIZE	3.953	8.0	3.0	1.221
FO (After first difference)	13.433	59.926	0.0	16.384

DRISK: voluntary risk disclosure, IND: independence of the audit committee, EXP: experience of the audit committee, MEET: number of meetings of the audit committee, SIZE: size of the audit committee, FO: family ownership.

reveals the following:

Table 2 shows that the mean risk disclosure rate in the selected banks for (2017–2023) was (0.566), with a deviation (of 0.122). Furthermore, 0.793 was the highest amount that was recorded, and 0.172 was the lowest amount that was observed. The values indicate a difference between the selected banks in disclosing risks, which may be due to the difference in the banks’ internal policies related to disclosure, their difference in size, and their investment in technology and advanced information systems.

The mean of independence of the audit committee in the selected banks for (2017–2023) was (0.887), with a deviation of (0.169), and the highest observed value recorded was 1.0, whereas the lowest value recorded was 0.333. The values indicate a difference between the selected banks in the independence of the audit committee, which may be due to the difference in the size of those banks, the size of their board of directors, the organizational structure followed by them, and the shareholders’ orientations in imposing oversight and accountability.

The mean of experience of the audit committee in the selected banks for (2017–2023) was (1.476), with a deviation of (1.936), and the highest recorded value was 8.0, while the lowest recorded value was 0.0. The values indicate a difference between those banks in the experience of the audit committee, which may be due to the difference in the composition of the board of directors and its inclusion of members who hold certificates, skills, and competencies in the field of accounting and finance. The mean number of meetings held by the audit committee in those banks for the period of (2017–2023) was (7.405), with a deviation of (2.319). In addition, the highest observed value during the period was (19.0), while the lowest observed value was (4.0). The values indicate that there is a difference in the number of audit committee meetings, which is due to the difference in the size of commercial banks, the level of complexity in their activities and operations, the level and type of risks they deal with, and the difference in the organizational and administrative structure followed in the bank. The mean size of the audit committee in those banks for the period of (2017–2023) was (3.953), with a deviation of (1.221). Furthermore, the highest value observed during the said period was (8.0). Contrastingly, the lowest value observed was (3.0). The values denote a difference between the selected banks in the size of the audit committee, and this may be due to the difference in the number of board members, the diversity in its activities and operations, the complexity of the financial services provided, and the extent of its commitment to governance standards regarding the size of audit committees.

Moreover, the mean of family ownership in those banks for (2017–2023) was (13.433), with a deviation of (16.384). In addition, the highest level observed during the said period was (59.926), while the lowest level observed was (0.0). The values indicate a difference between the selected banks in family ownership, and this may be due to the difference in investment strategies in commercial banks and internal policies that encourage family participation.

4.2. Test of Multicollinearity

Testing multicollinearity between model variables requires the calculation of Pearson correlation coefficients between the independent variables.

Table 3. Correlation matrix for predictor variables.

Variable	IND	EXP	MEET	SIZE	FO
IND	1.000
EXP	−0.257 **	1.000
MEET	0.023	0.373 **	1.000
SIZE	−0.253 **	0.667 **	0.147	1.000
FO	−0.155	0.240 **	0.056	−0.022	1.000

IND: AC independence, EXP: experience of the AC, MEET: number of meetings of the AC, SIZE: size of the AC, FO: family ownership. (**) Significant at 0.01.

reveals that the maximum amount of the correlation coefficient (0.667) occurred between (EXP) and (SIZE). Therefore, multicollinearity is not applicable, as the values were less than (±0.80). In statistics, a value of (0.80) or more denotes multicollinearity (Gujarati, 2004). To verify this point, VIF was calculated as follows:

Table 4. VIF for independent variables.

Variable	VIF
IND	1.117
EXP	2.403
MEET	1.208
SIZE	2.008
FO	1.158

IND: AC independence, EXP: AC experience, MEET: number of meetings of the AC, SIZE: size of the AC, FO: family ownership.

shows that the VIF values above (1) were recorded. Furthermore, they were less than (10). These values indicate no multicollinearity among the variables (Gujarati, 2004).

4.3. Stationary Test

A stationary test is used to determine if a systematic change exists in either the mean or the variance in data. In this respect, the LLC test is applied.

It is clear from

Table 5. Results of the stationary test.

Variables	LLC-Statistic	Prob.	Results
DRISK	−5.283	0.000	Stationary at level
IND	−3.265	0.020	Stationary at level
EXP	−2.967	0.042	Stationary at level
MEET	−4.159	0.001	Stationary at level
SIZE	−4.261	0.001	Stationary at level
FO (After first difference)	−8.122	0.000	Stationary at level

DRISK: voluntary risk disclosure, IND: AC independence, EXP: AC experience, MEET: AC number of meetings, SIZE: size of the AC, FO: family ownership.

that the variables are stable, as the probability values (Prob.) did not go beyond the level of 0.05, except for the variable (family ownership), whose probability value was greater than 0.05. For this reason, the first difference was taken for the variable.

4.4. Estimate the Model

The econometric analysis was adopted in this study. In doing so, panel data of time series and cross-sectional data were used. To investigate the effect of the study models, the following were relied upon:

• Pooled regression model (PRM);
• Fixed effect model (FEM);
• Random effect model (REM).

Furthermore, selecting the proper model was conducted using the Lagrange multiplier. In addition, the appropriate model was selected by using the Hausman test.

Table 6. Lagrange multiplier test and Hausman test results.

Hypothesis	Lagrange Multiplier		Hausman		Appropriate Model
	Chi2	Sig.	Chi2	Sig.
H1	101.041	0.004	3.992	0.407	REM
H1-a	106.071	0.001	2.190	0.139	REM
H1-b	114.976	0.000	2.211	0.137	REM
H1-c	105.045	0.002	0.051	0.821	REM
H1-d	112.082	0.000	1.971	0.160	REM
H2	90.183	0.026	2.922	0.967	REM

denotes the accuracy of REM, which is the most accurate model in estimating the study hypothesis model. This is because the significance level values when conducting the Lagrange multiplier test were less than 0.05, while the significance level values when conducting the Hausman test were greater than 0.05.

4.5. Hypothesis Testing

This part deals with the results of hypothesis testing. In testing the hypotheses, a multiple regression analysis was applied.

The first main research hypothesis is as follows:

H1. 

The audit committee characteristics significantly affect voluntary risk disclosure in the selected banks.

Table 7. REM for the first main hypothesis and its subscales.

Variable	Co-Eff	Std Error	T-Value	p-Value *
IND	0.035	0.006	5.697	0.000
EXP	0.029	0.006	5.192	0.000
MEET	0.006	0.005	1.168	0.246
SIZE	0.005	0.002	2.745	0.008
R-squared		0.384
Adjusted R-squared		0.353
F-statistic		12.327
Prob*(F-statistic)		0.000
D-W		1.831

* Significant at 0.05 level.

reflects that R squared is (0.384), proving that the model explains about (38.4%) of the variation in voluntary risk disclosure. In addition, the significance value of the F-statistic is less than 0.05.

Therefore, the hypothesis as mentioned earlier is accepted, revealing that the au-dit committee characteristics significantly affect voluntary risk disclosure in Jordanian commercial banks.

• The sub-research hypotheses

The regression coefficients reveal that the (IND) positively affects voluntary risk disclosure, as the coefficient value is (0.035), which is significant, with (t = 5.697), as well as with (p-value = 0.000). Based on the above, the proposed hypothesis is accepted, denoting that the independent audit committee significantly affects voluntary risk disclosure in the selected banks. The regression coefficients prove that the (EXP) positively affects voluntary risk disclosure. In this respect, the coefficient value is (0.029), which is significant, with (t = 5.192), as well as with (p-value = 0.000). Based on this, the second hypothesis is accepted, denoting that the experience of the audit committee significantly affects voluntary risk disclosure in the selected banks.

The regression coefficients of the (MEET) do not significantly affect voluntary risk disclosure, as the coefficient value is (0.006), which is significant, with (t = 1.168), as well as (p-value = 0.246), which is greater than 0.05. Based on this, the third hypothesis is rejected and follows the alternative hypothesis instead, which states that the number of audit committee meetings does not significantly affect voluntary risk disclosure in the selected banks.

The regression coefficients of the (SIZE) reveal that (SIZE) positively affects voluntary risk disclosure. In this respect, the coefficient is (0.005), which is significant, with (t = 2.745), as well as with (p-value = 0.008). Based on this, the proposed hypothesis is adopted, denoting that the audit committee size positively affects voluntary risk disclosure in Jordanian commercial banks.

The second main research hypothesis is as follows:

H2. 

There is a mediating effect of family ownership on the effect of audit committee characteristics on voluntary risk disclosure in the selected banks.

Table 8. Random effect model for the second main hypothesis.

Variable	Co-Eff	Std Error	T-Value	p-Value *
IND	0.007	0.014	0.480	0.633
EXP	0.006	0.007	0.944	0.348
MEET	0.025	0.005	4.601	0.000
SIZE	0.003	0.015	0.177	0.860
FO	0.007	0.002	3.448	0.001
IND*FO	0.002	0.001	0.525	0.601
EXP*FO	0.001	0.003	2.091	0.040
MEET*FO	0.002	0.001	3.780	0.000
SIZE*FO	0.001	0.001	1.659	0.101
R-squared		0.388
Adjusted R-squared		0.313
F-statistic		5.210
Prob*(F-statistic)		0.000
D-W		1.706

* Significant at 0.05 level.

reveals that R squared is (0.388), denoting that nearly (38.8%) of the difference in voluntary risk disclosure is construed by the adopted model. Furthermore, the F-statistic (F = 5.210) and (Prob F = 0.000), which is less than the level of 0.05, denote that there is an effect of the independent variables on the dependent variable.

It is clear from the table that the coefficient value at (IND*FO) reached (0.002). In addition, the calculated T reached (0.525), with (SigT = 0.601), denoting no presence of a significant effect of family ownership on the effect of the independence of the audit committee on the voluntary disclosure of risks in the selected banks.

The coefficient at (EXP*FO) reached (0.001), and the calculated T reached (2.091), with (SigT = 0.040), which highlights the presence of a significant effect of family ownership on the effect of the experience of the audit committee on the voluntary disclosure of risks in the selected banks.

The coefficient at (MEET*FO) reached (0.002), and calculated T reached (3.780), with (SigT = 0.000), denoting the presence of a significant effect of family ownership on the number of AC meetings on the voluntary disclosure of risks in the selected banks.

The coefficient at (SIZE*FO) reached (0.001), and the calculated T reached (1.659), with (SigT = 0.101), revealing no presence of a significant effect of family ownership on audit committee size on the voluntary disclosure of risks in the selected banks.

Thus, the proposed hypothesis is adopted, denoting that family ownership affects the AC characteristics on voluntary risk disclosure in the selected banks.

5. Discussion

The results of this study show many important indications about the impact of AC characteristics on voluntary risk disclosure in Jordanian commercial banks and the effect of family ownership as a moderating factor on this relationship. By analyzing the financial and non-financial data of the selected banks over seven years, from 2017 until 2023, a set of results was reached that highlight the link joining these variables and provide a deeper understanding of the regulatory dynamics that affect the level of financial disclosure.

The multicollinearity test results proved that the independent variables in this study do not suffer from multicollinearity problems, which means that the data used were suitable for statistical analysis, and there were no significant interactions between the variables affecting the results. This enhances the reliability of the results and allows a clearer view of the factors influencing voluntary risk disclosure.

The results of the reliability test (Levin–Lin–Chu) demonstrated that most variables were stationary at the original level, except for the family ownership variable, which required taking the first differences to ensure stationarity. This indicates that the data are stable over time, meaning that the results from the analysis reflect the relationships between the variables and not random fluctuations in the data. The Lagrange multiplier’s result, as well as the Hausman test’s result, showed that the REM was the most accurate model. This indicates that random variances across banks were important in analyzing the link between AC characteristics and voluntary risk disclosure.

This study revealed that the AC’s characteristics, including independence of the audit committee experience and committee size, significantly affect voluntary risk disclosure in the selected banks. This result agrees with the findings of (Agyei-Mensah & Buertey, 2019), which implies that the independent audit committee is one important factor explaining heterogeneity in business risk disclosures. It also concurred with the arguments made by (Mangena & Chamisa, 2008; Karamanou & Vafeas, 2005), who claim that an impartial audit committee can oppose management influence, as well as support information release to the markets to reduce knowledge asymmetries. In addition, each of the studies revealed a favorable correlation between voluntary disclosure and audit committee independence (A. Buallay & Al-Ajmi, 2020; Elshandidy et al., 2022; Mnif Sellami & Borgi Fendri, 2017; Talpur et al., 2018). Regarding the connection between disclosure and the audit committee’s experience, the results of earlier research are conflicting. While (Alkurdi et al., 2019) discovered a favorable link with voluntary disclosure in Jordan, (Venturelli et al., 2019) demonstrated that audit committee experience negatively impacts voluntary disclosure in the UK and Italy which is not consistent with our study findings. Moreover, the results are consistent with those of Madi (2022), who discovered that a key element in increasing voluntary disclosure and decreasing agency theory-related asymmetry is the audit committee’s size. While Basah (2015) found no evidence of a link between the audit committee size with the voluntary disclosure degree, Albitar (2015) discovered that the audit committee size had a significant effect on the voluntary disclosure level. The size of the audit committee improves its capacity to track and provide high-quality data (A. Buallay, 2018; Al-Musali et al., 2019). These results align with the agency theory that the audit committee is considered an essential element in promoting transparency and voluntary disclosure of risks in companies through its careful supervision of financial reports and the internal control system (Alodat et al., 2023; Areiqat et al., 2021). These results were expected based on the previous literature that confirms that strong, independent, and highly experienced audit committees are better able to monitor financial disclosure and ensure transparency. This understanding reinforces the importance of enhancing these characteristics in audit committees to enhance the voluntary risk disclosure level.

However, the number of AC meetings did not impact the voluntary risk disclosure level. This suggests that increasing the number of meetings does not necessarily mean improved financial transparency, and the quality, as well as the effectiveness, of meetings may be more important than the number. This reflects the need to focus on the quality of meetings and ensure that each meeting adds real value to the audit and financial disclosure process. These findings did not align with the results of Allegrini and Greco’s (2013) study, which indicated the existence of a positive and substantial correlation between the audit committee meetings number and the levels of voluntary disclosure among Italian public listed businesses.

In addition, the results show that family ownership moderately affects the link between some audit committee characteristics and voluntary risk disclosure. For example, it was revealed that family ownership significantly affects the audit committee experience. In addition, the number of their meetings affects voluntary risk disclosure, while no effect was reported on independence and committee size. This reflects that family-owned banks may particularly benefit from the experience of audit committee members and the number of their meetings in enhancing financial transparency.

These results contribute to a deeper understanding of the regulatory dynamics that affect financial disclosure in the selected banks. It indicates the importance of enhancing the audit committee’s characteristics, like independence, expertise, and committee size, to ensure greater transparency in financial disclosure. It also highlights the role that family ownership can play in enhancing or modifying the effect of these characteristics. Based on these findings, it can be said that strong and independent audit committees have a crucial role in enhancing the level of voluntary risk disclosure in banks. Experience and independence are essential factors that increase the audit committee’s effectiveness and ensure that financial disclosure is carried out transparently and accurately. This understanding reinforces the importance of providing ongoing training and development to audit committee members to guarantee they possess the knowledge, as well as the skills, that are essential to perform their role effectively.

Ultimately, this study highlights the complex link among audit committee characteristics, family ownership, and the voluntary risk disclosure level in Jordanian commercial banks. It is important to strengthen the characteristics of the audit committee to ensure a greater level of financial transparency while considering the impact of internal dynamics of banks, such as family ownership. These findings provide valuable insights for decision-makers and financial management practitioners, helping to improve policies and procedures that enhance financial transparency and support financial system stability.

6. Conclusions

This study revealed several important indicators that highlight the impact of paid-up capital characteristics on voluntary risk disclosure in Jordanian commercial banks, with a particular focus on the impact of family ownership as a moderating factor in this relationship. By analyzing the financial and non-financial data of the selected banks during the period from 2017 to 2023, results were obtained proving that the independence of the audit committee, the experience of its members, and the size of the committee are among the main factors that significantly affect the level of voluntary risk disclosure. However, the results showed that the number of audit committee meetings is not directly related to improving the level of disclosure, indicating that the quality and effectiveness of these meetings may be more important than the quantity. The results also revealed the role of family ownership in moderating the impact of the audit committee on voluntary disclosure. This suggests that family-owned banks may particularly benefit from the experience of audit committee members and the number of their meetings to enhance financial transparency. Therefore, strengthening the characteristics of the audit committee and increasing its independence and expertise would enhance the level of voluntary disclosure of risks, which is in line with the agency theory that emphasizes the importance of internal control in reducing information asymmetry between companies and investors.

This study highlights the need to develop audit committees in Jordanian banks by training their members and developing their skills to ensure financial transparency. By better understanding the factors that affect voluntary disclosure, decision-makers can promote policies that support the stability of the financial system and contribute to improving bank performance.

7. Limitations and Future Studies

Despite the importance of its findings, this study is not without limitations that could affect the generalizability of the findings. In this respect, it is based on data from Jordanian commercial banks throughout (2017–2023). This period may be insufficient to generalize to longer periods or other financial sectors. Also, focusing on commercial banks only may not reflect the situation in other financial sectors, such as investment banks or non-banking financial institutions. Second, this study relied on a specific set of variables to measure audit committee characteristics and family ownership. There may be other significant variables that are relevant to the topic but were not included in the model. This could ultimately affect the comprehensiveness of the results. For example, the impact of macroeconomic factors or regulatory changes that may affect voluntary risk disclosure is not considered. Third, this study used traditional regression models to analyze the data. Although these models are effective, the use of advanced statistical or economic techniques, such as dynamic panel data models or machine learning techniques, may provide deeper and more accurate insights into the relationship among the variables. Fourth, this study relies on measuring voluntary risk disclosure as a dependent variable. There may be different ways to measure this variable, and each method may give different results. In addition, disclosure standards may ultimately vary, making direct comparisons between banks more complex.

Future studies could develop new and more precise ways to measure voluntary risk disclosure. These methods can include qualitative or quantitative indicators that combine various aspects of disclosure and improve the accuracy of measurement and comparison between banks. Future studies could also explore the influence of organizational and cultural factors on voluntary risk disclosure. These factors may include regulatory policies, legal frameworks, and cultural trends within financial institutions. This will help us gain a deeper understanding of how these factors affect the level of transparency and disclosure.