On the influence of the board’s financial education on voluntary disclosure: Evidence from Saudi Arabia (original) (raw)
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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.
This paper investigates the determinants and the features of voluntary disclosure based on information in the annual reports of 113 Saudi companies listed on Saudi stock market (Tadawul) for the period 2012-2013. Using a multivariate regression, the results shown that firm size, profitability, leverage and assets-in-place are the principal factors affecting the voluntary disclosure of Saudi firms. However, the board independence, ownership concentration and liquidity does not affect the level of voluntary disclosure for Saudi companies. Another interesting result is that audit quality have opposed effect on the disclosure level.
Corporate governance and voluntary disclosure: evidence from Bahrain
International Journal of Economics and Accounting
This study examined the relationship between corporate governance and voluntary disclosure. The study used a cross-sectional data for the year 2013 of 41 firms listed on Bahrain Bourse. Multiple regression approach was incorporated. The study found that the governance level was 47.1%. Voluntary disclosure percentage was found to be 51.1% in Bahrain Bourse which is considered high compared to previous studies. The results of the study test indicate that there is a positive relationship between the principals: ownership of the largest shareholder, size of the board of directors and independency of board of directors with voluntary disclosure, and that there is no relationship between ownership of the three largest shareholders and voluntary disclosure.
International Business Research, 2014
This study examines the impact of board composition on the level of voluntary disclosure in the annual reports of listed Jordanian firms. Content analysis is used to collect the required data form the 2012-annual reports of 103 firms listed on the Amman Stock Exchange. Overall, the empirical evidence provided by the study is in line with the agency theory predictions. Furthermore, they have practical implications for firms and regulators in Jordan on the importance of the board of directors and voluntary disclosure as control mechanisms for mitigating the effect of the information asymmetries and agency problems. The study shows a moderate level of voluntary disclosure in the annual reports of Jordanian firms. However, insurance firms tend to disclose more voluntary information than industrial and services firms. Also, the results suggest that Jordanian firms with a high-level of board ownership concentration tend to keep the level of voluntary disclosure low. On the other hand, the presence of foreign directors on the board seems to influence, positively, the level of voluntary disclosure in Jordanian firms. Likewise, the proportion of the old directors on the boards in Jordanian firms is very high and is significantly associated with a higher level of voluntary disclosure.
Corporate governance and voluntary disclosure in Kuwait
International Journal of Disclosure and Governance, 2010
This study investigates the relationship between corporate governance characteristics and voluntary disclosure in the annual reports of 170 Kuwaiti companies listed on the Kuwait Stock Exchange in 2007. We first identified four major corporate governance characteristics: proportion of non-executive directors to total number of directors on the board; proportion of family members to total number of directors on the board; role duality; and a voluntary audit committee. We then used univariate and multivariate regression analyses to examine the relationship between these characteristics and voluntary disclosure in annual reports. Using a self-disclosure index to measure voluntary disclosure, the average level of voluntary disclosure by sample companies is 19 per cent, indicating some improvement over the sample companies in an earlier study by Al-Shammari (2008), who found 15 per cent voluntary disclosure. This result suggests a trend toward more transparency by Kuwaiti companies. The ...
Corporate Governance Mechanisms and Voluntary Disclosure in Saudi Arabia
Research Journal of Finance and Accounting, 2013
The main objective of this study is to examine the impact of internal and external corporate governance mechanisms on voluntary disclosure in Saudi Arabia. The sample consists of 87 companies from the Saudi Stock Market. The data are collected from the annual reports for the available financial years 2006 and 2007. It is found that corporate governance mechanisms play a vital role in providing quality reporting. Most corporate governance mechanisms, especially non-executive directors, board size, CEO duality, audit quality, and government ownership, have a significant contribution in providing quality voluntary disclosure. The findings of this study provide evidence on the effectiveness of corporate governance as a mechanism of monitoring power to provide users with adequate and sufficient information. The findings of this study have important implications for authority regulators, policy makers, shareholders and other users of reports who have an interest in best practices of corporate governance.
Business & Society, 2015
This study investigates whether and to what extent publicly listed corporations voluntarily comply with and disclose recommended good corporate governance (CG) practices, and distinctively examines whether the observed cross-sectional differences in such CG disclosures can be explained by ownership and board mechanisms with specific focus on Saudi Arabia. The study’s results suggest that corporations with larger boards, a Big 4 auditor, higher government ownership, a CG committee, and higher institutional ownership disclose considerably more than those that are not. By contrast, the study finds that an increase in block ownership significantly reduces CG disclosure. The study’s results are generally robust to a number of econometric models that control for different types of disclosure indices, firm-specific characteristics, and firm-level fixed effects. The study’s results have important implications for policy makers, practitioners, and regulatory authorities, especially those in ...
Being managers of other people's money than their own, it cannot well be expected that they should watch over it with the same anxious vigilance. Like stewards of a rich man, they are apt to consider attention to small matters as not for their master's honor and very easily Abstract: 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
Corporate boards, shareholding structures and voluntary disclosure in emerging MENA economies
Journal of Accounting in Emerging Economies
Purpose The purpose of this paper is to investigate the level of voluntary compliance with, and disclosure of, corporate governance (CG) best practices, and the extent to which board characteristics and shareholding structures can explain discernible differences in the level of voluntary CG disclosure in a number of emerging Middle Eastern and North African (MENA) economies. Design/methodology/approach The paper uses a number of multivariate regression methods, namely, ordinary least squares, weighted, non-linear, lagged-effects, two-stage least squares and fixed-effects regression techniques to analyse data collected for a sample of listed corporations in emerging MENA economies from 2009 to 2014. Findings First, in general, MENA listed firms have a relatively lower level of voluntary compliance with, and disclosure of, CG practices compared to listed firms in developed countries. Second, the evidence suggests that corporate board characteristics, including board diversity, have a ...
"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.