A Case Study of Voluntary Disclosure by Chinese Enterprises
Asian Journal of Finance & Accounting, Vol. 1, No. 2, 2009
28 Pages Posted: 25 Jul 2011
Date Written: April 30, 2008
This study examines the impact of ownership features, corporate governance mechanisms, and firm-specific characteristics on the voluntary disclosure provided by publicly-listed companies on the Shanghai Stock Exchange in China. The ownership structure features and corporate governance mechanisms include (1) concentration of ownership; (2) ownership by state and state-related institutions; (3) individual ownership; (4) the chief executive officer is also the chairman of the board of directors; (5) board independence, and (6) the existence of an audit committee. The firm-specific characteristics are (1) firm size; (2) leverage; (3) profitability, and; (4) type of industry. With the use of a relative disclosure index for measuring the voluntary disclosure level, our results indicate that individual ownership, the existence of an audit committee, firm size, and leverage, including board structure and functioning, employee information, director‟s remuneration, the presence of an audit committee, related party transactions, and stakeholders‟ interests, are significantly related to the extent of voluntary disclosure. This study provides empirical evidence for Chinese policy makers and regulators to improve corporate governance mechanisms and transparency of publicly-listed companies. The findings also contribute to an understanding of disclosure behavior among former wholly state-owned enterprises during the privatization process in China.
Keywords: Voluntary disclosure, Corporate governance, Audit committee, Disclosure index, Firm-specific characteristic
JEL Classification: M40, M41, M48
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