Determinants of quality of corporate voluntary disclosure in emerging countries: a cross national study

The generalisability of much published research on corporate voluntary disclosure is problematic because there are many corporate and country level factors related to corporate voluntary disclosure: these factors have mainly been investigated in developed countries. Corporate voluntary disclosure is the disclosure of more corporate information than is legally required. Much research has focused on determinants of the quantity of corporate disclosure, while few studies have researched determinants of the quality of corporate voluntary disclosure. Quantity of corporate voluntary disclosure is measured by merely disclosing a particular item of information, whereas provision of additional information about a particular item that qualifies the level of the disclosure determines the quality of corporate voluntary disclosure. The limited research to date has not proven whether determinants of the quantity of corporate voluntary disclosure may also explain the variation of quality of corporate voluntary disclosure. Moreover, many of the existing studies of determinants of corporate voluntary disclosures are from developed countries. However, according to New Institutional Theory and Resource Dependency Theory, these results many not be applicable in developing countries. Finally, there are few cross-countries studies examining the quantity of corporate voluntary disclosure studies, and even fewer prior cross-countries studies on the quality of corporate voluntary disclosure particularly. It is the belief of the current research that the relationships between the quality of corporate voluntary disclosure and national legal systems, the financial expertise of directors, and audit committees have not previously been studied. Consequently, this thesis sought to examine factors relating mainly to the quality of corporate voluntary disclosure in ten developing countries: Turkey, Singapore, Malaysia, India, Ghana, Nigeria, South Africa, Brazil, Mexico and Chile. Unambiguously, the thesis interest was to examine how firm level factors are related to the quantity and quality of voluntary disclosure, as shown in annual reports. Also, it analyses how country level factors are associated with the quantity and quality of voluntary disclosure. New Institutional Sociology, Resource Dependence, and Agency theories have been used to explain these relationships. Methodologically, the quality and quantity of corporate voluntary disclosure was extracted from 600 corporate annual reports, taken from 300 randomly selected companies from 10 countries for the years 2011 and 2012. Then, an un-weighted corporate voluntary disclosure index measured both the quality and quantity of corporate voluntary disclosure. Results from multiple linear regression models show that share diffusion ownership was positively related to the quantity of corporate voluntary disclosure, as were the country level of press freedom, accounting professionalism and tertiary education. Share diffusion ownership, and country level of accounting professionalism, were negatively related to the quality of corporate voluntary disclosure. However, being audited by the big four auditing firms, and country level of tertiary education disclosure, were positively correlated with the quality of corporate voluntary disclosure. The results of percentage of audit committee on board directors, the percentage of board directors who have financial expertise, and the percentage of independent board directors were not related to either the quality or quantity of corporate voluntary disclosure. These results imply that regulators should focus their enforcement efforts on corporate bodies who are likely to have limited voluntary disclosure, to reduce enforcement costs. This means that governments, regulatory bodies and industrial associations should ensure that there is press freedom, professionalism, economic development and high educational levels in order to motivate corporations to disclose corporate information voluntarily. This thesis contributes to the literature in four main ways, through its investigation of the quality of corporate voluntary disclosure, contextually, its reconciliation of contradictory previous results and its offering of policy implications for regulators.