No abstract

Small businesses are the backbone of the economy in many countries. In Europe, for example, small companies represent more than 90 per cent of all companies (e.g., Lukacs, ). Although these companies represent such an important portion of the economy, few studies have examined their voluntary disclosure decisions. Because small companies have certain unique characteristics compared with their larger counterparts, the general applicability of past voluntary disclosure studies to small companies is questionable. Drawing on agency and proprietary cost theory, this study investigates whether ownership, competition, and accountant factors influence the decision to disclose financially sensitive information on a voluntary basis. Our results (using an e‐mail questionnaire to small private companies in Belgium, n = 1,068) indicate that nearly 40 per cent of the responding companies are not aware of their disclosure behavior. For companies that are aware of their disclosure behavior, the logistic regression analysis demonstrates that factors relating to the separation of ownership and control, namely the type of ownership and number of shareholders, are among the most important determinants in the voluntary disclosure decision of small private companies. Companies with at least one legal entity as an owner of a company are less likely to disclose, while companies with more shareholders are more likely to disclose. We also provide evidence that perceived competition and the default setting of the accounting software used have a significant influence on the voluntary disclosure behavior.

No abstract

This paper investigates the association between private firms’ timeliness of financial reporting and financial health by exploring firms’ reporting behaviour over a longer period of time (9 years). We show that 9% of all firms are consistently late every year and find significant differences in the association between firms’ financial health and late filing depending on their past filing behaviour. We find a negative association between firms’ financial health and late filing. However, our research also shows the opposite (i.e., positive) association for firms who were late consistently. Our results suggest that other motivations besides obfuscating bad performance might cause firms to delay the disclosure of their financial statements.