Abstract
This study investigates the relationship between non-financial information (NFI) mandatory disclosure and ownership concentration in the Italian context, which is characterized by pyramidal groups and high ownership concentration. Hence, the intent is to understand to what extent NFI mandatory disclosure might be related to ownership concentration. In pursuing this objective, the empirical research examines 141 listed Italian companies that are obliged to prepare their NFI in accordance with Italian Legislative Decree 254/2016. The study addresses the following research method. First, the research develops an NFI disclosure score based on a dichotomous approach following a quantitative content analysis of the 2017 non-financial statements to assess their level of compliance. Then, it develops a multivariate regression analysis to test whether or not, and if so, to what extent, ownership concentration affects the disclosure of NFI. We aim to enhance the academic debate in light of the path development of NFI disclosure under mandatory requirements and the increased awareness around responsible business practices. Moreover, it draws insights on the controversial results of the relationship between ownership structure and corporate social responsibility (CSR) when the disclosure around sustainability issues becomes compulsory.
Highlights
This paper examines the effect of ownership structure on the level of non-financial information (NFI hereafter) disclosure contextualized in Italy where there is high ownership concentration
The level of compliance is equal to 83.17% in mean; this means that, on average, the sample under investigation has achieved a great level of disclosure on NFI mandatory in the first year of its compulsory implementation
Keeping with this literature gap, the research has aimed to contribute to such a debate, and the study has been designed around a peculiar setting of investigation, characterized by high ownership concentration, as the case of Italy
Summary
This paper examines the effect of ownership structure on the level of non-financial information (NFI hereafter) disclosure contextualized in Italy where there is high ownership concentration. This research seeks to understand the extent under which NFI mandatory disclosure is related to ownership concentration. As a matter of fact, the concentrated ownership may affect NFI disclosure, depending on the different viewpoints with respect to CSR (Corporate Social Responsibility) practices (Faller, 2018). Such an implementation might depend on the cost of investing in these activities and eventually, on the demand for public disclosure, which may be weak in comparison with companies with lower ownership concentration (Muttakin & Khan, 2014). This research draws insights from the recent mandatory requirements on NFI disclosure of the Directive 95/2014/UE.
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