What is it about?
We provide insights on whether the quality of corporate governance impacts financial disclosure in firms. Using data from 153 large listed Indian firms, we suggest that the quality of governance practices significantly improves financial disclosure practices. Particularly, the composition of the audit committee is effective in improving disclosures.
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Why is it important?
The finding has implications for policy makers and practitioners. The findings, suggest the influence of governance practices on disclosure, might help in the formulation of appropriate policies about board structure and audit function. It is also a call to investors to emphasize on governance quality of the investing firms.
Perspectives
Listed firms usually feel that they are burdened or sometimes overburdened with regulations. However, our study gave an insight that following the spirit of the law is important than mere tick box exercises for improving governance, which further leads to improving financial disclosures. Given the distinct ownership structure, governance environment, and firm characteristics, our study based on Indian data provides an ideal setting for analyzing this question as governance practices are still in infancy and evolving.
Dr Arunima Haldar
S.P. Jain Institute of Management and Research
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This page is a summary of: Do compositions of board and audit committee improve financial disclosures?, Organizational Analysis, May 2017, Emerald,
DOI: 10.1108/ijoa-05-2016-1030.
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