Corporate governance and voluntary disclosure: evidence from India

Abstract

Purpose This study aims to examine the influence of some prominent corporate governance (CG) mechanisms such as board size (BS), board independence (BI), role duality (RD), board’s gender diversity (GD), ownership concentration (OC), audit committee independence (ACI), nomination and remuneration committee (NRC) and risk management committee (RMC) on voluntary disclosure (VD), as well as different types of VD after controlling the effect of some firm-specific factors for Indian firms. Design/methodology/approach The study selects market capitalization-based top 100 non-financial and non-utility firms listed on the Bombay Stock Exchange as on 31st March 2014. Data are drawn from the Capitaline Plus database over the period of 2014–2018. Appropriate panel data regression model is applied to examine the influence of CG on VD. Findings The study reveals a significant negative influence of BI on VD while GD and RMC exhibit a significant positive influence on the same. The remaining CG mechanisms such as BS, RD, OC, ACI and NRC appear to have no significant influence on VD. Analysis into the relationship between CG mechanisms and different types of VD reveals that BI, in particular, has a strong negative influence on corporate strategic disclosure (CSD) and forward looking disclosure (FWLD) while GD and RMC both exhibit a significant positive influence on CSD, FWLD, CG disclosure and financial and capital market disclosure. Notably, none of the CG mechanisms under consideration influence human and intellectual capital disclosure. Research limitations/implications The study considers annual reports as the only medium of making VD and ignores all other sources such as websites and press releases. Besides, it mainly emphasizes on corporate board structure, board committees and OC while other ownership structure-related variables family ownership, managerial ownership are not covered, which can be analysed in future studies. Practical implications The study offers some important theoretical, as well as practical connotations for regulators and practitioners operating in India, as well as other emerging economies having similar institutional settings. Originality/value The study is the first of its kind in India that examines the influence of various CG mechanisms on different types of VD and thereby contributes novel findings in the context of an emerging economy.

Board human capital diversity and firm performance: evidence from top listed Indian firms

“…The result indicates that though the direction of the impact of BQD and BGD on ROA remains the same as in case of market-based measure, but the level of significance becomes marginal. Thus, it is of no surprise that extant literature is largely using market-based measure of FP to measure the impact of board’s human capital or quality of governance (Kagzi and Guha, 2018; Nguyen et al , 2017; Maji and Saha, 2021; Saha and Kabra, 2021). In addition, market-based measure is a comprehensive concept that is concerned with the expected value of future cash flows, thus accounting profit also gets captured in it.…”

“…We consider firms’ financial performance (FP) as the response variable and it is captured by using both market- and accounting-based measures. In particular, two proxies of FP are used such as: market capitalization (LnMC) as investors’ expectation about the future prospect of firm gets reflected in their market performance, given its competitive advantage and talent of corporate management (Wolfe and Sauaia, 2014) – moreover, it is widely used in the recent literature to measure FP (Maji and Saha, 2021; Saha and Kabra, 2021); and return on assets (ROA) as the accounting measure of FP is used (Arora and Sharma, 2016).…”

The impact of board-level female directors on firm performance: evidence from India

“…The response variable considered in this study is the firms' financial performance and it is captured by using the market-based measure. In particular, the study uses natural logarithm of the market capitalization of sample firms (LnMCAP) as extant literature is largely using the market-based measure of firms' financial performance (Nguyen et al, 2017;Maji and Saha, 2021;Saha and Kabra, 2021). In addition, the market-based measure is a comprehensive term that is concerned with the expected value of all future cash flows, thus accounting profit also gets captured in it.…”

“…Thus, it is of vital importance to ascertain the reliability of such an assertion by investigating the performance impact of both independent and executive female directors. Third, the ownership structure of Indian firms differs from that in developed countries because the majority shareholders are either the company's promoters or the state (Rajagopalan and Zhang, 2008; Saha and Kabra, 2021). While advanced countries are characterized by dispersed ownership structures that create conflicts of interest between the shareholders and managers (vertical or Type-I agency problems), Indian firms experience conflicts of interest between majority-minority shareholders (horizontal or Type-II agency problems) (Balasubramanian and Anand, 2013).…”

Corporate governance, voluntary disclosure and firm valuation relationship: evidence from top listed Indian firms

“…Therefore, it can be inferred that there is a great level of convergence between diverse theoretical perspectives of VD in explaining its relevance in value creation of firms. However, despite such strong theoretical advocacies, the extent to which actual users of VD are likely to incorporate such information in their rational economic decision-making process has been of substantial interest during the last two decades (Saha and Kabra, 2021). The impact of VD on FV arises from either reducing cost of capital or facilitating financial performance prediction (Clarkson et al, 2013).…”