An empirical analysis of corporate governance structures and voluntary corporate disclosure in volatile capital markets: the Egyptian experience

Abstract

This paper examines the level and determinants (i.e. ownership structure, board composition and audit committee presence) of voluntary corporate disclosure in the annual reports of the largest 100 companies listed on the Egyptian stock exchange (EGX). Our results indicate that overall voluntary disclosure was low at just 13.43% with a large variation range. This score places Egypt at a lower level than other emerging capital markets (e.g. Singapore, Hong Kong and Malaysia). The variances of these results support the need for individual country level studies and comparative analysis. Multivariate results show audit committee presence as the most significant variable influencing voluntary disclosure. Also, companies with a higher ratio of independent non-executive directors have a higher extent of voluntary disclosure. It was also evidenced that voluntary disclosure increases with decreases in block-holder ownership. Results show that two other ownership aspects -managerial and government -are not related to voluntary disclosure. Finally, the analysis shows profitability and internationality significantly impact voluntary disclosure. On the other side, that number of shareholders, type of auditor, size, liquidity, leverage and industry type of the firm do not affect the extent of voluntary disclosure.

Corporate Governance and Strategic Management Accounting Disclosure

“…This indicates that with larger proportion of managerial ownership in Indonesian manufacturing company, the companies' voluntary SMA disclosure level is lower because SMA is considered as classified information and should not be disclosed to the management and shareholder. This result is in line with previous research conducted by Akhtaruddin & Haron (2010) and Samaha & Dahawy (2011), Huafang & Jianguo (2007 and Guan et al, (2007) which state that managerial ownership has negative influence to corporate disclosure. …”

“…Greater proportion of managerial ownership will cause more disclosure of company information (Jiang & Habib, 2009;Vu et al, 2011). However, these findings are in the opposite direction to the research results of Akhtaruddin & Haron (2010) and Samaha & Dahawy (2011) which conclude that managerial ownership has negative influence on corporate disclosures (Guan et al, 2007;Huafang & Jianguo, 2007).…”

Corporate Governance Disclosure in Developing Countries: A Comparative Analysis in Nigerian and South African Banks

“…The board executives of most of these businesses are filled with family members and close friends; often times, none of them are qualified for sensitive positions they occupy (Samaha & Dahawy, 2010). In a business environment such as this, the executives are more inclined to further their own personal interests to the detriment of other critical stakeholders and shareholders (Yakasai, 2001).…”

Environmental Factors Influencing Corporate Governance

“…1 Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria 2 Nasarawa State University, Keffi, Nigeria population, high level of inflation, an overwhelming debt service burden, an economy that is heavily import dependent, and rising levels of poverty (Samaha & Dahawy, 2011). Egypt has embarked on a number of corporate governance reforms aimed at enhancing corporate governance practices.…”