The Effect of Corporate Characteristics on Disclosure Quality in Corporate Annual Reports: A Meta-Analysis

Abstract

Considerable volume of research have been undertaken over the last 30 years assessing the effect of organisational size, listing status, leverage and audit firm size on disclosure quality in corporate annual reports. By applying meta-analysis techniques, the purposes of this paper are to evaluate prior results and to examine whether variation in the results is purely artifactual or is moderated by external factors such as differences in environments and disclosure index construction. Using data from 22 studies, the results show that highly significant and positive relationships exist between the four corporate characteristics and disclosure quality. However, a significant portion of the variation in results could not be explained by sampling error, which means that differences in socio-economic environments and disclosure index construction have moderating effects on the relationships. The results suggest that international harmonisation efforts will be futile if the International Accounting Standards Committee (IASC) ignores environmental differences between countries in setting accounting standards.

JEL Classification: M41