Drivers of Corporate Voluntary Disclosures: Empirical Evidence from Sri Lankan Listed Companies

Abstract

Stakeholders’ dissatisfaction with traditional mandatory financial reporting has led to increase the demand for more comprehensive voluntary information disclosures. As such, the corporate disclosure practices in Sri Lanka have changed dramatically in recent years. The purpose of this study is to identify the drivers of corporate voluntary disclosures in Sri Lankan listed companies. This study provides new insights about voluntary disclosures in Sri Lankan context since few studies have been conducted. Sixty non-financial companies were selected based on market capitalization for the study purpose. Company annual reports from 2009 to 2014 were scrutinized to find the voluntary disclosures. Panel regression was utilized due to the nature of time series and cross sectional. This study demonstrated that the level of voluntary disclosure in Sri Lankan listed companies is lower compared to other emerging countries. It is confirmed that the size of firm was the more significant factor in determining voluntary disclosure practices in Sri Lanka. Moreover, block holders negatively influenced to the voluntary disclosures in Sri Lankan listed companies. However, corporate governance variables do not have any impact to the voluntary disclosure practices. Furthermore, profitability, leverage, industry category are not influencing voluntary disclosure practices. This study has found that auditors’ duty has been limited to financial statements in Sri Lankan listed companies. The outcome of this study would encourage in developing standards for the disclose of information in annual reports and also persuade corporate managers to reform disclosure practices.