Impact of corporate governance on financial disclosures: Evidence from India

Abstract

The paper aims at identifying impact of corporate governance variables i.e. board structure (board size, board independence, board activity and board busyness) and ownership structure (foreign promoters holding, institutional shareholding and CEO duality) on financial disclosures made by the Indian firms. Using cross sectional data of 325 listed firms for the financial year 2009-10, we compute financial disclosure score (using 171 checklist points) based on disclosure requirements of accounting standards. We find average disclosure score of 73%, maximum and minimum being 100% and 46% respectively. Our finding support agency theory in terms of monitoring role of board since board size is found to be significant however we do not find any influence of board independence on the disclosures. The study also supports resource dependency theory in terms of outside directorship which might provide exposure to different corporate environment, brings diverse perspectives and knowledge to the directors and this in turn leads to improved disclosures. We also support the notion that having foreign promoter shareholding improves disclosures

Determinants of corporate environmental disclosure quality of oil and gas industry in developing countries

“…Rupley et al (2012) found that long-horizon shareholdings do not appear to influence the quality of voluntary CED. A recent study by Raithatha and Bapat (2014) found no association between institutional investors' shareholding and disclosures.…”

“…Ownership characteristics are another category of variables that have received considerable attentions from researchers concerning CSED. Various aspects of ownership structure have been considered in previous studies (Raithatha and Bapat, 2014). Previous studies revealed that companies with different ownership structures vary in disclosing their environmental information.…”

“…Corporate disclosure is a reasonable-cost tool to monitor and manage performance. Raithatha and Bapat (2014) argued that "due to higher ownership stake, institutional shareholders may influence the decision making of board, they may even encourage higher disclosures in the financial statements" (p. 878). Barako (2007) argued that "due to the large ownership stake, institutional investors have strong incentives to monitor corporate disclosure practices; thus, managers may voluntarily disclose information to meet the expectations of large shareholders" (p. 117).…”

The Influence of Firm Characteristics, Corporate Governance and Capital Structure on Islamicity Disclosure Index: A Study of Companies Listed in Jakarta Islamic Index During Period of 2012-2016

“…The direction of the path coefficient of Corporate Governance that is positively insignificant does not support the research concept of Samaha Khaled (2010), Raithatha & Bapat (2014) which shows that good Corporate Governance will further increase Firm Disclosure. The director, as the leading position, is very important and is the key to the company's success.…”

Symmetrical Information Disclosure for Investors’ Investment Decisions

“…The interest in information disclosure study has grown significantly in the past decade. Extensive empirical research has been conducted internationally on the association between corporate governance disclosure and firm performance (Raithatha & Bapat 2014;Ali et al 2017). The consensus findings show that the sound corporate governance can increase the firm value and attract investor investment to pay for a stock.…”