Disclosure Quality and Corporate Governance in a Context of Minority Expropriation

Abstract

In this paper we examine a combined set of corporate governance features that influence disclosure quality in a context of minority expropriation due to ownership concentration. This context allows studying a new agency conflict: controlling versus minority shareholders while most of previous studies focus on the conflict between managers and shareholders. We analyse a sample of 86 French firms over the 2004 period. In a market that is characterised by high ownership concentration and poor investor protection, we find a negative association between disclosure quality and family control, double voting shares, and both ownership and control concentration. The results obtained also suggest a positive relationship between disclosure quality and the presence of executive stock options plans, and with the proportion of independent directors in the board as well. These findings shed the light on corporate governance features that enhance incentives for good disclosure under high ownership concentration.