Do compositions of board and audit committee improve financial disclosures?

Abstract

Purpose This paper aims to examine the impact of corporate governance practices on the level of financial disclosures made by the Indian firms. This assumes importance in the context of the role of financial disclosures in addressing the agency problem. Design/methodology/approach Financial disclosure score is computed by considering disclosures provided by the generally accepted accounting principles and is the dependent variable. The independent variable – corporate governance score – is an index comprising internal governance mechanisms. The authors empirically examine the impact of corporate governance practices on financial disclosure using multiple regression model for 200 large listed Indian firms. Findings The study suggests that quality of governance practices significantly improves financial disclosure practices of the firm. Particularly, the composition of the audit committee is effective in improving disclosures. Practical implications The finding has implications for policy makers and practitioners. It will help investors, lenders, and other stakeholders to assess firms’ financial disclosure quality. In addition, the findings, suggest the influence of governance practices on disclosure, might help in the formulation of appropriate policies about board structure and audit function. It is also a call to investors to emphasize on governance quality of the investing firms. Originality/value The study builds a case for an urgent intervention for improving the existing governance standards to advance the quality of financial disclosure in an emerging market context.

Audit committee attributes and cosmetic accounting in Nigeria

“…The results from the study indicated that ACs decreased earnings management performed by managers and improved FRQ. This was affirmed in a recent study by Haldar and Raithatha (2017), who argued that ACs guarantee better disclosure and prepare entities to present steadfast and robust financial statements. Almaqoushi and Powell (2017) examined the effect of AC indices, firm value and accounting outcomes in the USA.…”

Pengaruh Komite Audit dan CEO Tenure Terhadap Kualitas Laporan Keuangan

“…Hasil penelitian Sil et al (2011) menemukan beberapa karakteristik komite audit menempatkan hubungan yang signifikan dengan manajemen laba. Menurut Haldar & Raithatha (2017) komite audit dapat menjamin penyajian laporan keuangan yang lebih baik. Pada penelitian Saleh & Iskandar (2007) pada 548 sampel data laporan tahunan perusahaan di Malaysia, menemukan bahwa keberadaan komite audit independen, intensitas rapat dan keahlian komite audit dapat mengurangi terjadinya praktik manajemen laba.…”

Corporate governance in India: A systematic review and synthesis for future research

“…There are a wide variation and fragmentation among corporate governance studies in India across disciplinary fields including finance, corporate governance practices, earning management, firm performance, firm value, and some other issues. Different areas have been investigated with corporate governance such as corporate illegality (Kaur, 2017), financial disclosure (Haldar & Raithatha, 2017), equity (Fruin & Dossani, 2012;Srivastava et al, 2019), internal control disclosure (Ashfaq & Rui, 2019), international competitiveness (Haldar et al, 2016), ownership (Gollakota & Gupta, 2006), quality of financial information (Hundal, 2016), regulatory and market model (Sehgal & Mulraj, 2008), risk reporting (Saggar & Singh, 2017), Satyam failure (Narayanaswamy et al, 2015), stock market volatility and efficiency (Prasanna, 2013), sustainability (Kansil & Singh, 2018) and talent management (Chahal & Kumari, 2013).…”