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<p>This study investigates the dual objectives of examining the effect of negative reporting tone on bank insolvency risk in the Middle Eastern and North African (MENA) region and analyzing the moderating role of ownership structure in this relationship. The empirical analysis is based on banks operating in the MENA region from 2012 to 2022. We employ a content analysis approach using the Loughran and McDonald dictionary to assess negative reporting tone. Our methodology then tests the impact of this tone on insolvency risk and explores the moderating influence of family and state ownership. The empirical results reveal that a more negative tone in annual reports increases bank insolvency risk. These findings align with appraisal theory and social identity theory, highlighting the significance of language in financial disclosures. Regarding ownership structure, state ownership emerges as a significant moderator, attenuating the negative impact of tone on insolvency risk. This research represents one of the first studies to examine the impact of disclosure tone on bank risk in the MENA region while specifically considering the distinctive characteristics of ownership structure.</p>

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Beyond numbers: negative disclosure tone, bank risk, and ownership structure in Middle East and North African Banks

  • 期刊论文

  • 发表日期：

    2025年3月19日

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  • Mohamed Malek Belhoula,
  • Naima Lassoued,
  • Imen Khanchel,
  • Dorsaf Ghraidi

摘要

This study investigates the dual objectives of examining the effect of negative reporting tone on bank insolvency risk in the Middle Eastern and North African (MENA) region and analyzing the moderating role of ownership structure in this relationship. The empirical analysis is based on banks operating in the MENA region from 2012 to 2022. We employ a content analysis approach using the Loughran and McDonald dictionary to assess negative reporting tone. Our methodology then tests the impact of this tone on insolvency risk and explores the moderating influence of family and state ownership. The empirical results reveal that a more negative tone in annual reports increases bank insolvency risk. These findings align with appraisal theory and social identity theory, highlighting the significance of language in financial disclosures. Regarding ownership structure, state ownership emerges as a significant moderator, attenuating the negative impact of tone on insolvency risk. This research represents one of the first studies to examine the impact of disclosure tone on bank risk in the MENA region while specifically considering the distinctive characteristics of ownership structure.