Exploring the impact of board experience diversity on voluntary disclosure: The moderating role of firm size

Abstract

This study investigates the relationship between board experience diversity, and voluntary disclosure in sub-Saharan African firms, with a focus on the moderating role of firm size. Employing a quantitative research approach and a longitudinal design, the study tracks changes over multiple time points to identify long-term patterns and causal relationships. Data was collected from the annual reports of firms in Ghana, Nigeria, and South Africa, spanning the years 2009 to 2021, resulting in 1807 firm-year observations. Contrary to the hypothesized positive relationship, the findings reveal a negative relationship between board experience diversity and voluntary disclosure, suggesting that increased diversity complicates the decision-making process and hinders disclosure. This negative relationship is in contrast to the resource dependence theory and other previous empirical studies (Nel et al., 2022; Reguera-Alvarado & Bravo-Urquiza, 2020) and supports the findings of Pucheta-Martínez and Gallego-Álvarez (2020). Moreover, the study highlights the moderating effect of firm size, showing that larger firms tend to have higher levels of voluntary disclosure. This finding is supported by previous empirical studies (Al-Qahtani & Elgharbawy, 2020; Githaiga & Kosgei, 2023; Saha & Kabra, 2020). The interaction term indicates that as firm size increases, the negative impact of board experience diversity on voluntary disclosure diminishes. These findings highlight the importance of considering firm size when evaluating the impact of board diversity on disclosure practices and the need for tailored governance strategies that consider firm size and the complexities of diverse boards. Implications for corporate governance suggest that merely increasing board diversity is insufficient and thus, effective management of the complexities associated with diverse boards is important.