Abstract
This study aims to examine the impact of ownership structure and board composition on the level of voluntary disclosure by non-financial firms listed in the Amman Stock Exchange (ASE). The study uses panel hand-collected data from 443 annual reports for a 5-year period (2012 – 2016) and employs an OLS-regression to test the study predictions. Compatible with the study predictions and most prior related studies’ findings, both higher managerial ownership and the CEO-duality produce low levels of voluntary disclosure, while foreign ownership is positively associated with the level of voluntary disclosure. Findings also indicate that larger firms deemed to provide higher levels of voluntary disclosures than smaller firms. Besides, companies audited by big4 firms disclose more voluntary information than those audited by others. The study findings have implications for policymakers and regulators. Policymakers and regulators may encourage, emphasize and enforce, if necessary, the regulation that enhances the quality of financial disclosures including the separation between the Chairman of the board of directors and CEO roles to improve the level of control and supervision and enhance the transparency of financial reporting by Jordanian firms.
Highlights
IntroductionCompanies became more concerned about how the public views them, especially, after the financial crises and corporate scandals (i.e. Enron in the USA, One. Tel and HIH Insurance in Australia) that resulted mainly from problems associated with corporate disclosures
In the new economy, companies became more concerned about how the public views them, especially, after the financial crises and corporate scandals
Voluntary disclosure is considered a vital controlling instrument; since providing shareholders with more transparent and sufficient information could satisfy their needs and help them in forming financial and economic decisions, it aids in protecting their rights
Summary
Companies became more concerned about how the public views them, especially, after the financial crises and corporate scandals (i.e. Enron in the USA, One. Tel and HIH Insurance in Australia) that resulted mainly from problems associated with corporate disclosures. Tel and HIH Insurance in Australia) that resulted mainly from problems associated with corporate disclosures Companies should reflect their good values and highlight that they are a good investment; to attract the public and gain their confidence and this can be done by releasing more relevant information in their annual reports. Stakeholders’ dissatisfaction with mandated disclosure has increased, especially after the financial crises and corporate scandals. Corporations, policymakers, and regulators worldwide are required to improve the level and the quality of voluntary disclosures to satisfy stakeholders’ needs to more transparent and higher quality financial reporting
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