Ownership concentration and Covid-19 disclosure: the mediating role of corporate leverage

• DOI: https://doi.org/10.1108/IJAIM-10-2021-0202
• Published date: 18 March 2022
• Date: 18 March 2022
• Pages: 339-351
• Subject Matter: Accounting & finance,Accounting/accountancy,Accounting methods/systems
• Author: Khaldoon Albitar,Mahmoud Elmarzouky,Khaled Hussainey

Ownership concentration and

Covid-19 disclosure: the mediating

role of corporate leverage

Khaldoon Albitar

Faculty of Business and Law, University of Portsmouth, Portsmouth, UK

Mahmoud Elmarzouky

Kingston Business School, Kingston University, London, UK, and

Khaled Hussainey

Faculty of Business and Law, University of Portsmouth, Portsmouth, UK

Abstract

Purpose –This paper aims to examinethe impact of ownership concentration on Covid-19 disclosurein the

narrative sectionsof corporate annual reports. It also exploresthe mediating role of corporate leverage on the

ownershipconcentration–Covid-19 disclosurerelationship.

Design/methodology/approach –This paper uses automated textual analysis to measure Covid-19

disclosure in annual reports. It also applies different regression models to test the research hypotheses and to address

the endogeneity problem. It uses univariate and multivariate analyses through correlations and ordinary least squares.

Findings –The analysis shows thatownership concentration has a negative impact on Covid-19 disclosure.

It also shows that corporate leveragenegatively affects Covid-19 disclosure, and it has a partial mediating

effect on the ownershipconcentration–Covid-19 disclosurerelationship.

Practical implications –The results offer important practical implications for the government,

management, shareholdersand policymakers. For example, corporate managers are encouragedto consider

small shareholders’interests and provide a suff‌icient level of Covid-19 disclosure to avoid violating their

rights. Also, the government may consider forminga mechanism for balancing the ownership structure to

protectsmall investors and weaken large shareholders’tunnellingbehaviours.

Originality/value –This paperoffers two important contributionsto governance and disclosure literature.

First, it provides new empiricalevidence on the relationship between ownership concentration and Covid-19

disclosure. Second, it provides new evidence on the mediating role of the leverage ratio on the ownership

concentration–Covid-19disclosure relationship.

Keywords Ownership concentration, Covid-19 disclosure, Corporate leverage, Textual analysis, UK

Paper type Research paper

1. Introduction

Covid-19 pandemic is considered the toughest challenge since the great depression, and it

has had substantial economicand f‌inancial impacts all over the world (Goodell, 2020;Heand

Harris, 2020;Albitaret al., 2020a;Elmarzouky et al., 2021a,2021b;Albitar et al., 2021). Under

this pandemic, many initiativeshave been seen by the UK governments, professional bodies

and Financial Reporting Council (FRC) to guide f‌irms to deal with the pandemic and report

more Covid-19-related information (Albitar et al., 2020a). In March 2020, FRC also issued a

specif‌ic notice related to the impact of the COVID-19 outbreak on f‌inancial reporting and

auditing (FRC, 2020). However, such practices are not strictly enforced, and there is no

mandatory requirement for entities to disclose information on such activities or how they

Ownership

concentration

and Covid-19

339

Received4 October 2021

Revised7 February 2022

Accepted25 February 2022

InternationalJournal of

Accounting& Information

Management

Vol.30 No. 3, 2022

pp. 339-351

© Emerald Publishing Limited

1834-7649

DOI 10.1108/IJAIM-10-2021-0202

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