Effectiveness of Corporate Governance Attributes on Disclosure of Non-Financial Information in Developing Economies

Godfrey Akileng ,Eric Nzibonera

doi:10.7176/rjfa/12-4-02

Abstract

The study examines how corporate governance attributes enhance disclosure of non-financial information in developing economies using a case study of companies listed on selected Stock Markets in Sub-Saharan Africa. Corporate governance attributes such as Chief Executive Officer (CEO) non-duality, board size, board composition, audit committee independence, block and director shareholdings are examined while controlling for firm size, profitability and leverage. The study adopts a quantitative research approach where panel data is obtained to carry out a comparative analysis of companies listed on stock markets of South Africa, East Africa and Nigeria. The data is collected from annual reports of each company for a period of four years and is analysed to obtain Random- Effects Multiple regression models. Findings indicate that the effect of CEO Non-duality, board size and having a higher proportion of non-executive directors on boards is significant and positive. Block ownership of shares and directors’ shareholdings have a negative effect on disclosure of non-financial information. However, the study does not provide evidence to suggest that Audit committee independence affects non- financial information disclosure. The major contribution of the study is to establish corporate governance attributes that play a vital role in disclosure of non-financial information using a comparative analysis of listed companies in Sub-Saharan Africa. The paper is the first of its kind in developing economies. Keywords : Corporate governance attributes, corporate disclosure, non-financial information. DOI: 10.7176/RJFA/12-4-02 Publication date: February 28 th 2021

Highlights

In accounting and finance literature, corporate disclosure is described as a principle of providing all information about the firm’s activities to different user groups in a timely manner to enhance the decision making process (Habibi and Shamsi, 2015)
A corporate governance system with effective and expert independent board of directors encourage the company to report to stakeholders both financial and non-financial information to guide in the investment decision process (Gunawan, 2019)
5.0: Discussion and conclusion of results of regression analysis The panel data analysis was carried out using data for a period of four years from 2013 to 2016 to carryout a comparative analysis for listed companies in South Africa, East Africa and Nigeria

Summary

Introduction

In accounting and finance literature, corporate disclosure is described as a principle of providing all information about the firm’s activities to different user groups in a timely manner to enhance the decision making process (Habibi and Shamsi, 2015). It is an external control mechanism aimed at reducing agency conflicts between internal and external shareholders through provision of valuable information on financial and non-financial results (Omran and Abdelrazik, 2013; Patelli and Prencipe, 2007). Disclosure of governance information addresses elements that are associated with the governance structure of a company such as general corporate information including organization mission and vision, corporate strategy, directors and employees (Gunawan, 2019; Meser et al, 2015)

Objectives

Methods

Results

Conclusion