Evaluating the Impact of Corporate Governance on Firm Performance Using Board Index

Okoth, Basil; Coşkun, Metin

doi:10.20944/preprints201608.0096.v1

Cited by 1 publication

(1 citation statement)

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“…It was concluded that family ownership reduces the level of information asymmetry between independent director and management courtesy of family ownership. Okoth and Coskun (2016) investigated the effect of corporate governance on firm performance. The study adopted descriptive research design and simple random sampling to select non-financial listed companies in Istanbul securities exchange.…”

Section: Empirical Reviewmentioning

confidence: 99%

Effect of Selected Board Characteristics on Financial Voluntary Disclosure among Manufacturing Firms Listed in Nairobi Securities Exchange Michael Kimeu Kamwana Dr Robert Ombati (PhD)

Kamwana¹,

Ombati²

2018

IJBSS

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Information asymmetry aids in investment decision making. In several instances listed companies are only required to disclose information as stipulated in international financial reporting and capital market authority guidelines. In some cases, listed companies provide quantitative and qualitative information which may be paramount to decision making amongst different stakeholders. Consequently, the study investigated the effect of selected board characteristics on financial voluntary disclosure among manufacturing firms listed in Nairobi securities in Exchange. Exploratory research was adopted and census of all 10 listed manufacturing applied. Correlation and regression analysis were used to analyse the data. Results of the study revealed positive and significant relationship between board size, independent directorship, audit committee size, gender board diversity board ownership and financial voluntary disclosure. It was concluded that there is need to incorporate independent board membership, match board size with company size, have fully functional audit committee, Introduction Background to the Study Voluntary disclosure refers to sharing information publicly other than what is required by laws or regulations done for the sake of companies' images, investors and accusation risk avoidance (Tian & Chen, 2009). It provides both financial and non-financial information. A high degree of disclosure attracts great attention from members of the public and hence increase the investors' confidence which explain the reasoning behind which companies are striving to achieve maximum disclosure. Moreover, it is a way of minimising adverse selection and moral hazards and ultimately reduces information asymmetry (Wang, Sewon & Claiborne, 2008). Voluntary disclosure has been classified differently by past studies but this study adopts three categories as done by (Eng & Mak, 2003; Lim, Matolcsy & Chow, 2007; Zhou & Panbunyuen, 2008); strategic information, financial and non-financial information. First, strategic information focuses on the future of the company and the past which conveys the status of the company both national and transnational. Strategic information emerges from company policy, objectives, capital expenditure and research and development expenditure budget. Second, financial information is expressed in monetary terms that can be evaluated through ratio such as liquidity, profitability, gearing/leverage and investors' ratio, forecasting sales and profit and analysis of market shares. These ratios communicate much about the company financial position and as such they should be computed and summarized for a period mostly three or two years to enhance comparison. Lastly, non-financial information relates to employee and activities that encourage corporate social responsibility such as society, environment (reducing pollution), donations, and charity and so on. For employees' disclosure is concerned about their welfare, any staff training and again (Zhou & Panbunyuen, 2008). There are notable key differences on v...

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Section: Empirical Reviewmentioning

confidence: 99%