disclose information voluntarily and can be of influence on the timing of the (voluntary) disclosures (Aboody & Kasznik, 2000). Litigation: the threat of shareholder litigation can have opposing effects on the disclosure policy of the firms. Legal actions for example for untimely or inadequate disclosures can encourage firms to disclose more voluntary information in order to avoid this. On the other hand, particularly forecasting information coming from managers might be negatively influenced if there is a climate where litigation is more commonplace. If managers believe that the legal system penalizes forward-looking information that is presented and made in good faith, they will be more reluctant to disclose this kind of information; Proprietary costs: firms have incentives not to disclose information that will reduce their competitive advantage, even if these (voluntary) disclosures reduce the cost of capital as stated before. This depends on the nature of the competition. Examples are threats of entry, existing competitors etc. Verrecchia (1983) states that the incentive to disclose information is a decreasing function of the potential proprietary costs attached to a disclosure and an increasing function of the favorableness of the news in a disclosure. However, there has been little evidence that supports the propriety costs hypothesis. Watts (1986) extended the propriety costs hypothesis by including other potential externalities from information disclosure such as potential political costs by disclosing information and contracting costs which may in turn affect voluntary disclosure. Political cost can occur when companies put themselves in the spotlight. For example, high profit firms can attract media and consumer attention, which in turn could lead to higher taxes and/or other regulation; Management talent signaling: managers are believed to strive to a high market value of the firm. In order to achieve this, they have to attract and report to investors. Managers, by voluntarily disclosing information, can reveal their type in terms of their ability (Trueman, 1986). This influences the investors` perception of the managers and his ability to anticipate to future change, which will lead to a higher market value. However, research supporting or refuting this hypothesis has not been found yet.
Corporate Characteristics, governance rules and the extent of voluntary disclosure in Spain the governance structure of the firm, and its disclosure policy. investigation has been gathered from a sample (117) of Spanish firms listed on the Madrid Stock Exchange the characteristics of the governance structure of the firm. The used ANOVA and Kruskall-Wallis to test their expectations. governance such as the proportion of independents on the board, the appointment of an audit committee, and directors’ shareholdings and stock option plans, are positively related to voluntary disclosure. We have also observed that these governance practices are significantly influenced by cross-listings and by the ownership structure of the firm (Leung & Horwitz, 2004) Director Ownership and Voluntary Segment Disclosure: Hong Kong Evidence To examine if there is a relationship between disclosures above a certain benchmark to the ownership structure of corporate boards. 376Hong Kong Listed companies for 1996 after exclusion of companies that did not disclose segment information or had missing data. The study uses voluntary segment disclosure above the benchmark minimum as a proxy for transparency and examines its relationship to the ownership structure and composition of corporate boards in Hong Kong They find that high (concentrated) board ownership explains the extent of low voluntary segment disclosure and this negative relationship is stronger when firm performance is very poor and the contribution of directors to enhance voluntary segment disclosure is effective for firms with low director ownership but not for concentrated-ownership firms. (Eng & Mak, 2003) Corporate governance and voluntary disclosure This paper examines the impact of ownership structure and board composition on voluntary disclosure The sample is drawn from firms listed on the Stock Exchange of Singapore (SES) as at the end of 1995. The total sample contained 158 firms with complete data for analysis that covered all the nine industry sectors. They regress the disclosure score on ownership variables and board composition after controlling for debt, firm size, growth opportunities, industry, analyst following, auditor reputation, profitability and stock performance. The results show that ownership structure and board composition affect disclosure. We find that lower managerial ownership and significant government ownership are associated with increased disclosure. Block holder ownership is not related to disclosure. An increase in outside directors reduces corporate disclosure. They also find that larger firms and firms with lower debt had greater disclosure.