IDEAS home Printed from https://ideas.repec.org/a/eme/arapps/v18y2010i1p68-82.html
   My bibliography  Save this article

Board ownership, audit committees' effectiveness and corporate voluntary disclosures

Author

Listed:
  • M. Akhtaruddin
  • Hasnah Haron

Abstract

Purpose - The aim of this paper is to examine the linkages between board ownership, audit committees' effectiveness in terms of the proportion of independent non‐executive directors (INED) and expert members on the audit committee and corporate voluntary disclosures. Design/methodology/approach - The paper is based on a sample of 124 public listed companies in Malaysia for studying differences in corporate governance characteristics which affect the financial disclosure. Findings - The empirical results indicate that that board ownership is associated with lower levels of voluntary disclosures. The result is consistent with the notion that board ownership increases agency costs resulting from information asymmetry between firm management and outsider investors. The negative relationship between board ownership and corporate voluntary disclosure is, however, weaker for firms with higher proportion of INED on the audit committee indicating that INED moderate board ownership/corporate voluntary disclosure relationship. Overall, the findings lend support for firms with a higher level of board ownership to include more independent directors on the audit committee to increase disclosure levels and reduce information asymmetry between firm management and investors. Originality/value - This paper demonstrates the usefulness of corporate governance factors mainly board ownership and effective audit committee on financial reporting practices. It is expected that this research will have important policy implication to reduce information asymmetry and improves corporate governance.

Suggested Citation

  • M. Akhtaruddin & Hasnah Haron, 2010. "Board ownership, audit committees' effectiveness and corporate voluntary disclosures," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 18(1), pages 68-82, May.
    • Handle: RePEc:eme:arapps:v:18:y:2010:i:1:p:68-82
    DOI: 10.1108/13217341011046015
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/13217341011046015/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/13217341011046015/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/13217341011046015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    2. Collier, Paul & Gregory, Alan, 1999. "Audit committee activity and agency costs," Journal of Accounting and Public Policy, Elsevier, vol. 18(4-5), pages 311-332.
    3. Nagar, Venky & Nanda, Dhananjay & Wysocki, Peter, 2003. "Discretionary disclosure and stock-based incentives," Journal of Accounting and Economics, Elsevier, vol. 34(1-3), pages 283-309, January.
    4. Klein, April, 1998. "Firm Performance and Board Committee Structure," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 275-303, April.
    5. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    6. Chau, Gerald K. & Gray, Sidney J., 2002. "Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore," The International Journal of Accounting, Elsevier, vol. 37(2), pages 247-265.
    7. Gary K Meek & Clare B Roberts & Sidney J Gray, 1995. "Factors Influencing Voluntary Annual Report Disclosures By U.S., U.K. and Continental European Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(3), pages 555-572, September.
    8. Eng, L. L. & Mak, Y. T., 2003. "Corporate governance and voluntary disclosure," Journal of Accounting and Public Policy, Elsevier, vol. 22(4), pages 325-345.
    9. Chen, Charles J. P. & Jaggi, Bikki, 2000. "Association between independent non-executive directors, family control and financial disclosures in Hong Kong," Journal of Accounting and Public Policy, Elsevier, vol. 19(4-5), pages 285-310.
    10. Fan, Joseph P. H. & Wong, T. J., 2002. "Corporate ownership structure and the informativeness of accounting earnings in East Asia," Journal of Accounting and Economics, Elsevier, vol. 33(3), pages 401-425, August.
    11. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    12. Lang, M & Lundholm, R, 1993. "Cross-Sectional Determinants Of Analyst Ratings Of Corporate Disclosures," Journal of Accounting Research, Wiley Blackwell, vol. 31(2), pages 246-271.
    13. Mak, Y. T. & Li, Yuan, 2001. "Determinants of corporate ownership and board structure: evidence from Singapore," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 235-256, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. Akhtaruddin & Hasnah Haron, 2010. "Board ownership, audit committees’ effectiveness, and corporate voluntary disclosures," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 18(3), pages 245-259, September.
    2. Chau, Gerald & Gray, Sidney J., 2010. "Family ownership, board independence and voluntary disclosure: Evidence from Hong Kong," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 19(2), pages 93-109.
    3. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 187-216, February.
    4. Chiraz Ben Ali, 2014. "Corporate Governance, Principal-Principal Agency Conflicts, and Disclosure," Working Papers 2014-125, Department of Research, Ipag Business School.
    5. repec:dau:papers:123456789/2719 is not listed on IDEAS
    6. Guillamon-Saorin, Encarna & Sousa, Carlos M.P., 2010. "Press release disclosures in Spain and the UK," International Business Review, Elsevier, vol. 19(1), pages 1-15, February.
    7. Roshayani Arshad & Rohaya Md Nor & Nur Adura Ahmad Noruddin, 2011. "Ownership Structure And Interaction Effects Of Firm Performance On Management Commentary Disclosures," Journal of Global Management, Global Research Agency, vol. 2(2), pages 124-145, July.
    8. Gisbert, Ana & Navallas, Begoña, 2013. "The association between voluntary disclosure and corporate governance in the presence of severe agency conflicts," Advances in accounting, Elsevier, vol. 29(2), pages 286-298.
    9. Kelly Anh Vu & Greg Tower & Glennda Scully, 2011. "Corporate communication for Vietnamese listed firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 19(2), pages 125-146, July.
    10. Roshayani Arshad Author_Email: roshayani@salam.uitm.edu.my & Rohaya Md Nor & Nur Adura Ahmad Noruddin, 2011. "Ownership Structure And Interaction Effects Of Firm Performance On Management Commentary Disclosures," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-332, Conference Master Resources.
    11. Giulio Greco, 2011. "Determinants of board and audit committee meeting frequency: Evidence from Italian companies," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(3), pages 208-229, March.
    12. Rupjyoti Saha & K. C. Kabra, 2020. "Corporate Governance and Voluntary Disclosure: A Synthesis of Empirical Studies," Business Perspectives and Research, , vol. 8(2), pages 117-138, July.
    13. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    14. S. Lim & Z. Matolcsy & D. Chow, 2007. "The Association between Board Composition and Different Types of Voluntary Disclosure," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 555-583.
    15. Ayman Haddad & Wasim AlShattarat & Naser AbuGhazaleh & Haitham Nobanee, 2015. "The impact of ownership structure and family board domination on voluntary disclosure for Jordanian listed companies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 203-234, December.
    16. Mahmoud Al‐Akra & Ian Eddie & Muhammad Ali, 2010. "The association between privatisation and voluntary disclosure: Evidence from Jordan," Accounting and Business Research, Taylor & Francis Journals, vol. 40(1), pages 55-74.
    17. Shan, Yuan George, 2019. "Do corporate governance and disclosure tone drive voluntary disclosure of related-party transactions in China?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 34(C), pages 30-48.
    18. Connelly, J. Thomas & Limpaphayom, Piman & Nagarajan, Nandu J., 2012. "Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1722-1743.
    19. Ahmed Abousamak, 2016. "Principal-principal internal governance mechanisms and the firms' performance: evidence from an emerging market," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(2), pages 145-169.
    20. Lopes, Patricia Teixeira & Rodrigues, Lucia Lima, 2007. "Accounting for financial instruments: An analysis of the determinants of disclosure in the Portuguese stock exchange," The International Journal of Accounting, Elsevier, vol. 42(1), pages 25-56.
    21. Chiraz Ben Ali, 2007. "Qualite De Publication Financiere Et Gouvernance : Cas Du Sbf 120," Post-Print halshs-00543099, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:arapps:v:18:y:2010:i:1:p:68-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.