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The Association between Board Composition and Different Types of Voluntary Disclosure

The Association between Board Composition and Different Types of Voluntary Disclosure Abstract This study examines the association between board composition and voluntary disclosure in annual reports. In particular, it addresses the incentives within the agency theory framework for both inside and independent directors to disclosure additional information voluntarily. Further, it provides evidence on the relation between the overall total voluntary disclosure and the components of voluntary disclosure, such as forward looking, strategic, non-financial and historical financial disclosures and board composition. Our sample is based on 181 Australian companies. We have developed and hand-collected 67 items from annual reports to develop the total voluntary disclosure index and the sub-indices of voluntary disclosure. Using two-stage multivariate analyses, our results provide some important insights. First, we find that there is a positive association between board composition and the voluntary disclosure of information in annual reports. Second, we also find that independent boards provide more voluntary disclosure of forward looking information and strategic information. However, board structure has no bearing on the voluntary disclosure of non-financial and historical financial information. Our findings are enhanced by different empirical specifications and sensitivity tests. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Accounting Review Taylor & Francis

The Association between Board Composition and Different Types of Voluntary Disclosure

European Accounting Review , Volume 16 (3): 29 – Sep 1, 2007
29 pages

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References (54)

Publisher
Taylor & Francis
Copyright
Copyright European Accounting Association
ISSN
1468-4497
eISSN
0963-8180
DOI
10.1080/09638180701507155
Publisher site
See Article on Publisher Site

Abstract

Abstract This study examines the association between board composition and voluntary disclosure in annual reports. In particular, it addresses the incentives within the agency theory framework for both inside and independent directors to disclosure additional information voluntarily. Further, it provides evidence on the relation between the overall total voluntary disclosure and the components of voluntary disclosure, such as forward looking, strategic, non-financial and historical financial disclosures and board composition. Our sample is based on 181 Australian companies. We have developed and hand-collected 67 items from annual reports to develop the total voluntary disclosure index and the sub-indices of voluntary disclosure. Using two-stage multivariate analyses, our results provide some important insights. First, we find that there is a positive association between board composition and the voluntary disclosure of information in annual reports. Second, we also find that independent boards provide more voluntary disclosure of forward looking information and strategic information. However, board structure has no bearing on the voluntary disclosure of non-financial and historical financial information. Our findings are enhanced by different empirical specifications and sensitivity tests.

Journal

European Accounting ReviewTaylor & Francis

Published: Sep 1, 2007

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