A study of the relationship between corporate governance structures and the extent of voluntary disclosure (original) (raw)
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Malaysian Management Journal, 2020
This paper extends the literature on voluntary disclosure by reference to a developing country, namely Thailand, through a study of 70 voluntary disclosure items in the corporate annual reports of 317 public listed companies in 2004. The study examined the relationship between the level of voluntary disclosure and a single characteristic of corporate governance characteristics, namely the quality of the board of directors. It further examined the influence of the executive directors on this relationship. The findings suggested that the quality of the board of directors is positively associated with the level of voluntary disclosure, and this association appears to be weaker for firms with an executive director that has the family member, largest shareholder involved compared to the non-family member, largest shareholder and a high concentration of executive directors’ ownership compared to a low concentration of executive directors’ ownership. This effect is further exacerbated when...
Corporate Governance and Voluntary Disclosure in Corporate Annual Reports of Malaysian Listed Firms
This study investigates empirically the extent of corporate governance and voluntary disclosure by listed firms in Malaysia. The governance factors examined are Board size, proportion of independent non-executive directors (INDs) on board, outside share ownership, family control, and percentage of audit committee members to total members on the board. Our results suggest a positive association between Board size and voluntary disclosures and between proportion of INDs and voluntary information. However, the extent of voluntary disclosure is negatively related to family control, and the ratio of audit committee members to total members on the board is not related to voluntary disclosures. The findings of our study have policy implications for Malaysia as well as for other East Asian countries because of the similarities in the socio-cultural environment and ownership structure of firms in these countries.
This study investigates empirically the extent of corporate governance and voluntary disclosure by listed firms in Malaysia. The governance factors examined are Board size, proportion of independent non-executive directors (INDs) on board, outside share ownership, family control, and percentage of audit committee members to total members on the board. Our results suggest a positive association between Board size and voluntary disclosures and between proportion of INDs and voluntary information. However, the extent of voluntary disclosure is negatively related to family control, and the ratio of audit committee members to total members on the board is not related to voluntary disclosures. The findings of our study have policy implications for Malaysia as well as for other East Asian countries because of the similarities in the socio-cultural environment and ownership structure of firms in these countries.
Purpose -The paper aims to examine the impact of ownership structure and board composition on voluntary disclosures of listed companies in China. Design/methodology/approach -Using an OLS-regression model to test the relationship among ownership structure, board composition and the level of voluntary disclosure. The sample is based on 559 firm observations in 2002. Findings -Higher blockholder ownership and foreign listing/shares ownership is associated with increased disclosure. However, managerial ownership, state ownership, and legal-person ownership are not related to disclosure. An increase in independent directors increases corporate disclosure and CEO duality is associated with lower disclosure. The paper also finds that larger firms had greater disclosure, while firms with growth opportunities are reluctant to disclose information voluntarily. Research limitations/implications -Firstly, the sample is comprised of companies listed on Shanghai Stock Exchange in 2002 and only 45.7 percent of representative firms listed in China. Secondly, the disclosure checklist does not cover all voluntary disclosure in corporations as employed and supported in several prior studies. Thirdly, the award of checklist items may be subjected to errors. Practical implications -This paper indicates the relationship among ownership structure, board composition and corporate voluntary disclosure, and provides evidence for Chinese regulators to improve corporate governance and optimize ownership structure. Originality/value -Distinct from prior empirical research based on disclosure behavior in developed-western markets, this study examines the impact of ownership structure and board composition on voluntary disclosures of listed companies in the Asian setting of China.
Universal Journal of Accounting and Finance, 2021
The objective of the present research is to examine the relationship between corporate governance and voluntary disclosure, and to determine how certain factors enhance governance practices and consequently increase voluntary disclosure. The study considers the content analysis of 22 Saudi listed companies from 2015 to 2019. A comprehensive index is developed, with a check-list covering 30 items to extract and measure corporate governance practices and levels of voluntary disclosure. The researchers use ordinary least squares (OLS) regression to examine whether corporate governance-specific mechanisms can explain any differences in voluntary disclosure levels among the listed companies. The results indicate a statistically significant relationship between the number of non-executive directors and board size and the level of voluntary disclosure. This study concluded that non-executive directors and board size are ranked the highest in terms of their positive effects on voluntary disclosure. The relationship between the independent directors and audit committees and voluntary disclosure is insignificant. The results suggest that the high number of non-executive directors and the increase in the number of directors on the boards lead to greater voluntary disclosure of information. This study helps regulators of corporate governance and company directors understand the factors affecting voluntary disclosure. Corporate governance regulators should require an increase in the minimum number of boards and non-executive directors for listed companies in order to gain the desired levels of voluntary disclosure and transparency. Saudi listed companies are advised to willingly increase their board members to the maximum number specified by regulation. This study has some limitations as participants represented a small sample; hence, the results cannot be generalised. Furthermore, the voluntary disclosure data were collected only from annual reports; sources such as websites, public announcements and press releases, were not taken into account, but would have provided many relevant details.
Corporate Governance Mechanisms and Voluntary Disclosure
2020
Corporate disclosure and corporate governance are two inseparable instruments of investor protection. This research sought to find evidence on how corporate governance mechanisms affect the extent of voluntary disclosures. Voluntary disclosures were measured using content analysis on published annual reports. The sample of this research consisted of 81 firm-year observations from 27 firms of consumer goods sector listed on Indonesian Stock Exchange from 2016 to 2018. Using multiple regression method, the result has shown that board size and board independence increase voluntary disclosures, indicating that the commissioners have effectively represented the interests of shareholders by monitoring and encouraging the management to increase disclosure. This research provided new evidence that family ownership increases voluntary disclosure, suggesting that family firms are more concerned by the costs of non-disclosure. Meanwhile, institutional ownership does not significantly affect vo...
Board ownership, audit committees' effectiveness, and corporate voluntary disclosures
Purpose -The aim of the paper is to examine the linkages between board ownership, audit committees' (ACs) effectiveness in terms of the proportion of independent non-executive directors (INED) and expert members on the AC and corporate voluntary disclosures. Design/methodology/approach -The paper is based on a sample of 124 public listed companies in Malaysia for studying differences in corporate governance characteristics which affect the financial disclosure. Findings -The empirical results indicate that board ownership is associated with lower levels of voluntary disclosures. The result is consistent with the notion that board ownership increases agency costs resulting from information asymmetry between firm management and outsider investors. The negative relationship between board ownership and corporate voluntary disclosure is, however, weaker for firms with higher proportion of INED on the AC indicating that INED moderate board ownership/corporate voluntary disclosure relationship. Overall, the findings lend support for firms with a higher level of board ownership to include more independent directors on the AC to increase disclosure levels and reduce information asymmetry between firm management and investors. Originality/value -The paper demonstrates the usefulness of corporate governance factors mainly board ownership and effective AC on financial reporting practices. It is expected that this research will have important policy implication to reduce information asymmetry and improves corporate governance.
"Impact of Board Characteristics and Ownership Structure on Voluntary Disclosure"
Concept of corporate governance gained a significant importance and inadequacy of sound corporate governance practices attributed to be one of the most important underlying factors behind the cause of both recent global financial crises and company scandals throughout the world which have engulfed financial markets and economies. Motivation of this study is to examine the extent of voluntary disclosure in annual reports and web-sites of companies to find out whether the variables that researchers have found to be significant in explaining voluntary disclosure practices in developed countries apply in a developing country – Turkey. Turkey is chosen among the other developing countries because it is believed to be a country with special characteristics then most of the other countries since legal, political, economic system of the country are a composition of different practices. On the other hand much of the evidence on corporate governance in Turkey is descriptive issues there is currently no empirical evidence available on the relationship between the extent of voluntary disclosure and corporate governance characteristics of listed Turkish non-financial companies. Objectives of this study twofold: First, it analyses the theoretical relationship between voluntary disclosure and several corporate governance components - board characteristics and ownership structure. Board characteristics are examined in terms of board size, proportion of independent members on the board and CEO / chairman duality; ownership structure is examined in terms of institutional ownership and family ownership. The managerial ownership is not considered in this study since firms in Turkey mostly owned either by institutions or families and the share of firms owned by their managers are relatively small. Second, it provides empirical evidence on the relation between the indicated corporate governance components and voluntary disclosure. For this purpose a disclosure checklist is developed from the second section of Corporate Governance Principles of Capital Markets Board (CMB) of Turkey on “Public Disclosure and Transparency” and by the help of this checklist annual reports for the year of 2010 and web-sites of the non-financial companies in Istanbul Stock Exchange (ISE)-100 are examined. The Poisson regression model is designed to fit a model. Our results suggest that the extent of voluntary disclosure is significantly positively associated with board size and the proportion of independent members on the board and significantly negatively associated with the level of family ownership. CEO /chairman duality is found to be positively associated with the extent of voluntary disclosure but surprisingly it is insignificant.
Jurnal Pengurusan
Lack of effective corporate governance mechanism and disclosure transparency frameworks have been partly blamed for the 1997-1999 East Asia economic crises. Consequently, Indonesia, together with many countries across the globe have been actively reviewing and improving their corporate governance and transparency mechanisms. Theoretically, corporate governance mechanism is designed to monitor and evaluate decisions made by managers in the management of a company to reduce agency cost and information asymmetry between the shareholders and the management. The main objective of the study is to examine the effect of corporate governance mechanism on the level of voluntary disclosure in Indonesia, a country that has adopted a two-tier board system. The two-tier board system is considered a better system compared to one tier board system since all members of the board are non-executives. Therefore, the board members are more independent and objective in supervising and monitoring the performance of executive managers. This study investigates four corporate governance variables which are expected to influence the level of voluntary disclosure; (1) composition of independent members of Board of Commissioners (BOC), (2) composition of family members on the BOC, (3) audit quality, and (4) managerial ownership. The sample consists of companies listed on Bursa Saham Indonesia for the year ended 2008. The influence of corporate governance on the level of voluntary disclosure is analyzed using multiple regression method. As expected, the results show that the compositions of independent BOC and auditor's quality have a positive and significant relationship with the level of voluntary disclosure. Meanwhile, the composition of family members on the BOC has negatively influenced the disclosure. The results suggest that the corporate governance structure in a two-tier board system, specifically in Indonesia, is not significantly different from a one tier board system in influencing the level of voluntary disclosure.