Determinants of Voluntary Disclosure of Sales by Small Private Companies

Abstract

The purpose of this paper is to provide generalizable evidence on the determinants influencing the voluntary disclosure of sales in the abbreviated financial statements of small private companies. We estimate our model separately for micro-entities and non-micro small companies. The existing literature examining voluntary disclosure behavior does so mainly in a context of capital markets, leaving voluntary disclosure incentives of small and private companies largely unexplored. As we observe that many small private companies in Belgium disclose more financial information than required, understanding the benefits associated with higher disclosure levels is important. We empirically show on a sample of 243,633 small companies, which includes 163,686 micro-entities, that small private companies have incentives to disclose financially sensitive information on a voluntary basis.