Voluntary Corporate Governance Research Articles

The impact of corporate governance statement assurance on financial professionals’ decisions

Corporate Governance (CG) reporting receives increasing attention. This study examines the impact of voluntary CG statement assurance on financial analysts’ and bankers’ decisions. An experiment with a 2 × 2 + 1 between-subject design was conducted. The independent variables comprise the assurance provider (Big Four statutory auditor vs. another Big Four audit firm) and assurance level (limited vs. reasonable). Additionally, a control condition without assurance provision is used. The participants’ reliance on the CG statement, their likelihood to recommend an investment in shares of the fictitious company, their credit risk assessment, and the likelihood to purchase shares of the fictitious company themselves served as dependent variables. Our results indicate that CG statement assurance increases the likelihood for investment recommendation. Moreover, they do not indicate a significant impact of the type of assurance provider. Reasonable assurance predominantly results in decisions of financial professionals which are more favorable for the fictitious company than limited assurance.

Capital structure, voluntary corporate governance and credit ratings: Evidence from non-listed SMEs

Capital structure, voluntary corporate governance and credit ratings: Evidence from non-listed SMEs

Capital structure, voluntary corporate governance and credit ratings: evidence from non-listed SMEs

Capital structure, voluntary corporate governance and credit ratings: evidence from non-listed SMEs

Voluntary corporate governance disclosure and bank performance: evidence from an emerging market

PurposeThis study aims to explore the extent of voluntary corporate governance disclosure in the annual reports of banks in the UAE, operating in an emerging economy in the Gulf Cooperation Council region. It also examines the effect of this non-financial disclosure on bank performance by differentiating conventional and Islamic banks.Design/methodology/approachThis study applies content analysis to explore the extent of voluntary corporate governance disclosure using data collected from the annual reports of all the banks traded on the UAE financial markets from 2003 through 2020. It further examines the potential effect of voluntary disclosure on bank performance using dynamic panel data regressions.FindingsThe results indicate a low level of voluntary corporate governance disclosure in the annual reports for most disclosure indices. However, conventional and Islamic banks do not differ significantly. Additionally, the results of the robust dynamic panel data from the two-step generalized method of moments system estimation confirm that voluntary corporate governance disclosure does not affect bank performance significantly.Practical implicationsThe findings of this study would benefit the central bank and lawmakers in the UAE in developing a framework for appropriate voluntary disclosure and enhancing the corporate governance framework to improve the quality of annual reports.Originality/valueThis study contributes to the literature on the extent of corporate governance disclosure, as well as its association with bank performance in an emerging economy by differentiating between conventional and Islamic banks.

Pengaruh Pengungkapan Tata Kelola Perusahaan terhadap Akurasi Harga Saham pada Perusahaan yang Terdaftar di Bursa Efek Indonesia Tahun 2013-2017

This study was conducted to analyze the effect of corporate governance disclosure to Share Price Accuracy. The variables of corporate governance disclosure in this study are divided into two namely Mandatory Corporate Governance Disclosure and Voluntary Corporate Governance Disclosure.
 The data obtained in this research is secondary data. The Secondary data used are financial statement data and company annual report data. Secondary data can be downloaded from Indonesian stock exchanges official website via www.idx.co.id. The number of companies used as research samples are 393 companies. The study period began from 2013 to 2017. The data obtained were as many as 1965 data. 
 The conclusion of this study prove that both of the independent variables have a significant effect to Share Price Accuracy.Mandatory Corporate Governance Disclosure has a significant positive effect to the Share Price Accuracy partially.Voluntary Corporate Governance disclosure also has significant effect to the Share Price Accuracy partially.

Critical Analysis of the International Standards on Corporate Governance and Its Compliance

Critical Analysis of the International Standards on Corporate Governance and Its Compliance

Voluntary hedging disclosure and corporate governance

Purpose This paper aims to investigate the implications of governance quality on a firm’s information environment in the context of voluntary changes in hedging disclosures made by oil and gas companies. Design/methodology/approach The research utilizes a Factiva-guided search to hand-collect public disclosures related to changes in hedging policies along with the hand collection of financial derivatives positions and operational hedging contracts data using 10-K filings. The paper addresses self-selection bias, which typically plagues voluntary disclosure studies, by implementing a Heckman (1979) two-step model to estimate the decision process, make changes in their hedge program and, conditional on making changes to their hedging activities, provide disclosure. Findings Oil and gas firms with relatively poor governance are more likely to voluntarily disclose hedging changes and do so more frequently (substitution hypothesis). There is evidence that poorly governed firms in the presence of large shareholders (i.e. high institutional ownership) are more likely to provide transparency of hedging policy changes. Originality/value This is the first study to combine hand-collected changes in hedging voluntary disclosures and hand-collected derivative position data to investigate the interaction of corporate governance and voluntary disclosure. The sample allows for analysis between three sub-samples: companies that do not make changes in hedging and do not hedge, firms that make changes in their hedging policies but do not disclose the changes during a given year and companies that change their hedging activities and provide voluntary disclosure. This unique setting helps to alleviate concerns of self-selection bias associated with voluntary disclosure.

Corporate boards, shareholding structures and voluntary disclosure in emerging MENA economies

PurposeThe purpose of this paper is to investigate the level of voluntary compliance with, and disclosure of, corporate governance (CG) best practices, and the extent to which board characteristics and shareholding structures can explain discernible differences in the level of voluntary CG disclosure in a number of emerging Middle Eastern and North African (MENA) economies.Design/methodology/approachThe paper uses a number of multivariate regression methods, namely, ordinary least squares, weighted, non-linear, lagged-effects, two-stage least squares and fixed-effects regression techniques to analyse data collected for a sample of listed corporations in emerging MENA economies from 2009 to 2014.FindingsFirst, in general, MENA listed firms have a relatively lower level of voluntary compliance with, and disclosure of, CG practices compared to listed firms in developed countries. Second, the evidence suggests that corporate board characteristics, including board diversity, have a positive association with the level of voluntary CG disclosure. In contrast, the findings indicate that unitary board leadership structure, director shareholdings and government shareholdings negatively impact on the level of voluntary CG disclosure. The study does not, however, find any evidence to suggest that family shareholdings have any significant relationship with the level of voluntary CG disclosure. The findings are generally robust to alternative measures and potential endogeneity problems.Originality/valueThis is one of the first empirical efforts at investigating the association between CG mechanisms and voluntary disclosure in emerging MENA economies that observably relies on a multi-theoretical framework within a longitudinal cross-country research setting.

Do audit committee structure increases influence the level of voluntary corporate governance disclosures?

PurposeThe purpose of this paper is to provide an insight into the voluntary corporate governance disclosure and AC practices among Malaysian property listed companies. Along with that, the influence of AC characteristics on voluntary corporate governance disclosure was also examined.Design/methodology/approachThe study used the content analysis of annual reports to extract voluntary corporate governance disclosures and audit committee (AC) practices. The relationship between voluntary corporate governance disclosures and AC characteristics was examined by using the panel data regression analysis.FindingsBased on the results of the study, it can be concluded that all three variables: AC size, AC independence and AC meetings are the factors that influence the level of voluntary corporate governance disclosure among sampled companies.Practical implicationsThis study provides an overview of voluntary corporate governance disclosures practices, which have shown an increasing trend of information disclosed by Malaysian listed property companies. Additionally, the AC structure was also found satisfactory with highly independent and higher number of meetings as required by Malaysian Code of Corporate Governance and Bursa Malaysia requirement.Social implicationsBy filling the gap identified in this study, investors’ confidence will boost as they will have sufficient information about the Malaysian listed property companies – resulting in strengthening competitiveness and growth by attracting local and foreign investments in the country. The influence of AC attributes over the quality of disclosure among Malaysian listed properties companies is identified, and regulators introduce more explicit rules for AC mechanism for improving the disclosure quality. The increase in the quality of information provided in the annual reports will lead toward highly efficient and transparent stock market.Originality/valueThis study has provided an insight into corporate governance of listed companies in Malaysia, which will contribute to the extended literature. Along with that, it will also provide an overview of corporate governance structure among Malaysian listed companies to the policy makers.

Do specialized board committees impact the transparency of corporate political disclosure? Evidence from S&P 500 companies

This study examines how the specific attributes of one type of voluntary corporate governance mechanism, a specialized political contribution committee, improves the transparency of corporate political disclosure (CPD). The results demonstrate that the existence of a committee that establishes and reviews key political activities and disclosure policies, particularly one composed entirely of outside directors, significantly enhances the transparency of corporate political disclosure, and reveal that an under-studied board committee, the political contribution committee, effectively improves CPD transparency. The results are consistent with agency theory and further support the more generalizable idea that specialized governance mechanisms (e.g., a political contribution committee) and fully independent committees lead to more transparent disclosure. Finally, the results suggest that the existence of a political contribution committee and committee independence are channels to improve CPD transparency. Public-policy makers and regulators seeking to enhance CPD transparency might consider implementing regulations that mandate or recommend these governance mechanisms as best practice.

Determining firm characteristics and the level of voluntary corporate governance disclosures among Malaysian listed property companies

This study examined the level of voluntary corporate governance disclosures and the influence of firm characteristics (i.e., firm size, firm age, and firm market listing) on the level of these disclosures among Malaysian property listed companies. The check-list to measure the voluntary corporate governance disclosures was adopted from Malaysian corporate governance index 2011 by Minority Shareholder Watchdog Group (MSWG). The voluntary corporate governance disclosure practices and firm specific characteristics were obtained from annual reports of property listed companies on Bursa Malaysia for the period of 2012 to 2015. The findings suggested an improving voluntary corporate governance reforms in Malaysia. However, the firm size was found as an inflicting factor in determining the level and quality of voluntary corporate governance disclosure practices. On the contrary, the results found were contradicting the hypothesis related to firm age and firm market listing, as no relation of voluntary corporate governance disclosures and firm age and firm market listing. The study has made an interesting contribution toward the disclosure and corporate governance by contributing in understanding the importance of quality disclosure and good governance practices.

Factors influencing adoption and disclosure of voluntary corporate governance practices by the Indian listed firms

This study is aimed at ascertainment of factors influencing adoption and disclosure of voluntary corporate governance practices (VCGP) of Indian listed firms. Results revealed that: a) there exists a large variation in VCGP across Indian firms; b) VCGP of Indian firms are significantly affected by their size, financial leverage, ownership concentration, industry type, the effectiveness of their audit committees, foreign listing status and type of external auditors. Further, this study confirmed: a) the substitution effect of 'Leverage' and 'Ownership Concentration' on adoption and disclosures of VCGP; b) the presence of interaction (interplay) between 'Leverage' and 'Ownership Concentration'. While firms with high and moderately diversified shareholding pattern depict substitution effect of leverage on adoption of VCGP, firms with highly concentrated shareholding pattern depict substitution effect of ownership concentration on adoption of VCGP.

Factors influencing adoption and disclosure of voluntary corporate governance practices by the Indian listed firms

Factors influencing adoption and disclosure of voluntary corporate governance practices by the Indian listed firms

The impact of corporate governance code on earnings management in listed non-financial firms

PurposeThe purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya.Design/methodology/approachUsing a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI).FindingsThe overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya.Practical implicationsEvidence of income decreasing\\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG.Originality/valueThis study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

Voluntary Corporate Governance Disclosure Innovative Evidence: The Case of Jordan

This paper aimed to assess the corporate governance voluntary disclosure level and the impact of a set of corporate governances (CG) attributes on the level to which corporate governance voluntary disclosure is conducted in Jordan. Another objective was to determine if Jordanian industrial listed corporations adhere to and disclose good CG practices voluntarily, and if they do, to determine the factors influencing such disclosure. This study employed 61 industrial listed firms for the years 2010-2014. The research developed a general voluntary CG disclosure index composing of 15 Jordanian Corporate Governance Codes and gauged the relationship via pooled OLS and regression method. The results indicated that the proposed Jordanian Corporate Governance Index (JCGI) enhanced voluntary corporate governance disclosure among Jordanian listed firms over the examined years. They also showed varying levels of CG disclosures in different scenarios; 1) it is lower in firms with higher managerial ownership and 2) higher relative to the independent directors' proportion on the board, audit firm size, and audit committee presence with institutional ownership. Evidence on the compliance level towards the CG code in Amman Stock Exchange is unique and the study is distinct as it provides a pioneering evidence of the achieved compliance level.

Voluntary Corporate Governance Disclosures and Profitability: An Examination of Islamic and Traditional Banks of UAE

The objective of this paper is to explore the extent of voluntary corporate governance disclosure in the annual reports of the commercial and Islamic banks traded on UAE stock exchanges for the sample period 2003-2013 and also to study the effect of this type of disclosures on banks’ profitability. The results indicate a low level of voluntary corporate governance disclosure in the annual reports for the majority of disclosure indices while no significant difference between the traditional and Islamic banks. In addition, the results of the robust dynamic panel data from the two- step Generalized Method of Moments (GMM) system estimation confirm no significant effect of voluntary corporate governance disclosure on the banking profitability.

The Role of Voluntary Corporate Governance Mechanisms on Environmental Risk Disclosure: Australian Evidence

We examine the factors associated with the establishment of an environmental committee at the board level and its impact on the disclosure of environmental risks in an Australian context. Using a sample of Australian Stock Exchange firms disclosing their information to the Carbon Disclosure Project, we document a strong association between the existence of environmental committee and board independence, CEO duality, directors’ share ownership, and institutional shareholding. Firms that belong to environmentally sensitive industries are more likely to have environmental committees. Furthermore, we find that firms with environmental committees are more likely to disclose environmental risk information and this leads to mitigation in information asymmetry between managers and stakeholders.

An Evaluation of Corporate Governance Disclosure in Ghanaian and Nigerian Banks

Corporate governance disclosure has become the buzz word for countries in developing economies, with the spate of corporate governance failures and the need to prevent a continuation of this trend. There has been the call for developing countries to enhance and improve on corporate governance disclosure practices. This study examines corporate governance disclosure in Ghanaian and Nigerian Banks using the un-weighted disclosure index technique. This research analyses corporate governance disclosure practices in the annual reports of 10 listed banks in Ghanaian and Nigerian banks in the year 2014. The findings of the research reveal that Ghanaian and Nigerian banks comply with several codes and principles of corporate governance disclosure: with Ghanaian banks having a lower level of disclosure than their Nigerian counterparts. On closer inspection, both Ghanaian and Nigerian banks have poor scores in voluntary corporate governance disclosure. Ghanaian banks tend to be worse off, as the level of variation in levels of corporate governance disclosure is higher than Nigerian banks. In comparison, Nigerian banks on the average tend to have better voluntary disclosure practices than Ghanaian banks. Also, Ghanaian and Nigerian banks include some elements of corporate social responsibility reporting in their annual reports. The research recommends that policymakers and regulators should devise policies targeted at enhancing voluntary corporate governance disclosure and increasing board diversity in the boardrooms.

Antecedents of voluntary corporate governance disclosure: a post-2007/08 financial crisis evidence from the influential UK Combined Code

Purpose The purpose of this study is to investigate the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms and consequently ascertain whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices. Design/methodology/approach This study uses one of the largest data sets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted to address the potential endogeneity issue and test the robustness of the findings. Findings The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. The authors also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership negatively affect voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory. Originality/value This study extends, as well as contributes to, the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/2008 global financial crisis. This study also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.

A Comparative Analysis of Corporate Governance Disclosure in Nigerian and South African Banks

This research examines corporate governance disclosure in Nigerian and South African Banks using the unweighted disclosure index technique. This research provides a cross sectional examination of corporate governance disclosure practices in the annual reports of 10 listed banks in Nigeria and South Africa for the year 2013. The results suggest that Nigerian and South African banks have a high level corporate governance disclosure. However, Nigeria and South African banks have low levels of voluntary corporate governance disclosure. Furthermore, in reporting of voluntary corporate governance disclosure, Nigerian banks appear to be collating information with no link to the overall business strategy of the organization while the South African banks have a more robust approach to voluntary corporate governance disclosure as they apply international guidelines such as the global reporting initiative in reporting voluntary corporate governance disclosure.