Exploring the Effects of Corporate Governance on Voluntary Disclosure: An Explanatory Study on the Adoption of Integrated Report

Abstract

Purpose\ud The chapter builds on the literature of Agency and Signalling Theories to analyse the corporate governance factors associated with the voluntary decision to prepare an Integrated Report according to the <IR> International Framework promoted by the IIRC.\ud \ud Methodology/approach\ud The chapter is based on the results of a probit regression run with regard to a sample of 35 companies that joined the Pilot Programme in 2011 and 137 similar companies that did not.\ud \ud Findings\ud The analysis of two samples of European companies reveals that adhesion to the IR Pilot Programme is positively related to the gender diversity and size of the board.\ud \ud Research limitations\ud Further research is required in order to study the differences between listed and non-listed companies in terms of variables affecting the adoption of the <IR> Framework and to increase the time range of our study. In addition, it would be interesting to include other variables capturing different aspects other than corporate governance, since the decision to join the Programme, as the results of our analysis have shown, may also be influenced by other factors, such as strategy decisions and communication policies.\ud \ud Originality/value\ud The chapter adds to the existing literature by showing the main governance characteristics that impact the decision to adhere to the IR Pilot Programme. It is also important to the existing literature regarding the role played by gender diversity in corporate governance mechanisms and CSR policies

Exploring the firm and country determinants of the voluntary adoption of integrated reporting

“…Therefore, discourses on the effect that diversity could have on IR were preliminary. This interpretation is confirmed also by the findings of Fiori et al (). They demonstrated a positive and significant relationship between gender diversity and IR.…”

“…This variable, together with the following two, aims to investigate the link between corporate governance characteristics and the voluntary production by a company of an integrated report. The number of individuals composing the board has attracted the attention of numerous studies for the difficulties of coordination between members and in relation to agency issues with the company management (Fiori et al, ; Izzo & Fiori, ). Yet the evidence of the significance of this corporate governance variable vis‐à‐vis voluntary disclosure is still uncertain (e.g., Pearce & Zahra, , Dalton, Daily, Johnson, & Ellstrand, , vs. Prado‐Lorenzo & Garcia‐Sanchez, ).…”

“…Probably also because of the limited availability of comparable data, a marginal number of studies have investigated which are the determinants of the voluntary adoption of integrated reporting through quantitative methods only. And also in this case, they have focussed on specific features, such as the effect of the cultural system (García‐Sánchez, Rodríguez‐Ariza, & Frías‐Aceituno, ) or of the country (Jensen & Berg, ; Frías‐Aceituno, Rodríguez‐Ariza, & García‐Sánchez, ); of firm's characteristics such as company size and profitability (García‐Sánchez et al, ; Frias‐Aceituno, Rodríguez‐Ariza, & Garcia‐Sánchez, ), of the board, and, in general, corporate governance (Fiori, di Donato, & Izzo, ; Frias‐Aceituno, Rodriguez‐Ariza, & Garcia‐Sanchez, ; Izzo & Fiori, ); or of a combination of them (Busco, Malafronte, Pereira, & Starita, ), thus lacking to provide a comprehensive view. To the best of the authors' knowledge, to date only Vaz, Fernandez‐Feijoo, and Ruiz, () have taken into consideration both firm and country variables to investigate the voluntary adoption of integrated reporting, but their sample is based on reports extracted from the Global Reporting Initiative Database, which is the one mainly devoted to showcase sustainability reports.…”

The Effects of Board Compositions and Audit Committee Characteristics on Information Disclosure Practices: A Case of Singapore

“…More to the point, a study of Mandzila and Zéghal (2016) posits that the extent of corporate disclosure is driven by a firm's corporate governance attributes including board size, board independence, CEO duality and ownership structure. This evidence can be supported by a study of Fiori et al, (2016) which explores the effects of corporate governance on voluntary disclosure in the EU, debates that size of the board is positively correlated with the adoption of the integrated report, leading to greater disclosure practices. Similarly, a study of Al-Janadi, et al (2013) also argues that the level of corporate disclosure will increase with a large number of non-executive directors and a high proportion of board size, implying that the role of independent directors could help to protect the shareholders' interests.…”

“…ISSN 1946-052X 2018 Most of them (e.g. Cheung et al, 2007;Akhtaruddin et al, 2009;Al-Janadi et al, 2013;Hashima et al, 2015;Fiori et al, 2016;Yang et al) suggest that size of a board has a positive correlation with a decision of management to disclose or not disclose information, indicating that firms with a large board size are generally more willing to disclose corporate information to the stakeholders than the others. As supported by both theoretical insights and the harmonious signal from several empirical studies, it might be postulated that there could be a positive relationship between board size and disclosure practices in the Singapore context.…”