Abstract
The objective of this study is to understand whether firm characteristics explain the extent of corporate disclosures in the annual reports of listed Indian companies. In the field of accounting, voluntary information disclosures have been receiving a lot of attention as they bridge the gap between what is mandatory and what is sought by the stakeholders. Due to the prime focus of corporate disclosure literature on the linkage of company characteristics with the extent of disclosures, it becomes pertinent to study this aspect before studying the policy and regulatory impact. Hence, it is examined what prompts listed corporate entities in an emerging market like India to disclose more. The disclosure scores of Indian CNX 100 companies over a period of five years (2011–2015) related to firm characteristics such as age, size, and listing status were arrived at through content analysis and subsequent coding of the data. The study applied correlation, regression, and t-test to analyze respective scores and firm-specific data accessed from CMIE Prowess and Ace Equity industry databases. The study found firm characteristics such as age and listing status to be non-significant in leading corporations to enhanced disclosures. However, regression results improving with respect to the firm size and almost becoming significant in later years especially in the post-policy period (i.e., post-2013) remains an important takeaway from this study. The study stands on a formidable ground that it is the policy initiatives that are pushing firms to reveal more about their businesses keeping in mind the diverse perspectives of accounting information users
Highlights
Accounting is about managing the diverse information needs of a firm’s users of information
India with its growth engines on did not wish to emerge as an economy that is oblivious of the shared resources and its responsibility towards them, in line with the European Union’s directives Ministry of Corporate Affairs (MCA) drafted the National Voluntary Guidelines (NVGs) in 2011 which were adequately fine-tuned with ESG framework
Using the two-way approach to test the significance or otherwise of effect of age of the firm on extent of accounting disclosures, firstly, correlations between the two variables were calculated for the following hypothesis: H1: ρ = 0, i.e., there is no 0 significant correlation between the age of a firm and voluntary total disclosures (VTD), voluntary financial disclosures (VFD), and voluntary non-financial disclosures (VNFD)
Summary
Accounting is about managing the diverse information needs of a firm’s users of information. One of the needs of these users who are both internal, as well as external, is to stay apprised of the activities of an organization so that they can make informed decisions while transacting with them This dimension of accounting has led to a shift in the way we manage our businesses. Annual reports of the corporations do have a good amount of financial disclosures but this doesn’t meet the needs and requirements of those users who are exclusive and independent of a business entity The users, such as non-government organizations, communities, media, the general public, environmentalists who wish to seek information on sustainable sourcing, as well as utilization of resources are neither satisfied with mandatory disclosures nor with voluntary information disclosures. India with its growth engines on did not wish to emerge as an economy that is oblivious of the shared resources and its responsibility towards them, in line with the European Union’s directives Ministry of Corporate Affairs (MCA) drafted the National Voluntary Guidelines (NVGs) in 2011 which were adequately fine-tuned with ESG (economic, social, and governance) framework
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