ABSTRACT
This study assessed the impact of board structure on voluntary disclosure of information in the Nigerian listed industrial goods companies for the period of ten (10) years 2004 to 2013. Thirteen companies out of twenty three companies were selected based on the criteria that the company must be listed for the entire period of the study, and must have the required data for the study. The data for the study were collected from annual reports and accounts of the sampled companies and were analysed using descriptive statistics, correlation coefficient and multiple regressions (OLS and GLS). Thus, a panel data regression technique was employed since the data has both time series and cross sectional attributes. While CEO duality and board composition have significant negative effects on the extent of voluntary disclosure of information in the Nigerian listed industrial goods companies, board size is found to have positive effects on the extent of voluntary disclosure. Thus, the study recommends that companies that does not separate the role of chairman and chief executive officer should do so and those companies that has done so should maintained the separation of such role in the Nigerian Listed Industrial Goods Companies in to order to reduce concentration of power and to strengthen the propensity to voluntarily disclose information. To enhance board independence and its effectiveness in monitoring the management, the appointment of independent directors on the board should be based on their reputation, accounting knowledge, industry background, and requisite experience of the company, rather than on other non professional considerations. The findings of this study have fundamental policy implication regarding the effectiveness of board structure in influencing the extent of voluntary disclosure in the Nigerian listed industrial goods companies.
CHAPTER ONE
Introduction
1.1 Background of the study
Voluntary disclosure can be seen as a response to several factors, such as changes in capital markets, changes in business environments and/or globalization (Healy & Palepu 2001). Previous studies have also shown that firms that are upfront in their disclosures tend to experience cheaper cost of capital (Botosan 1997, Karamanou & Vafeas 2005 Leuz & Verrecchia 2000, and Sengupta 1998). Information in the annual reports should be disclosed to reflect timeliness (Ball & Shivakumar 2005a), relevance (Ball, Robin & Sadka 2008), comparability (Lin & Wang 2001) and understandability (Courtis 1998, and Smith & Taffler 1992). But, however, differences exist in disclosure practices across countries due to a range of reasons (Nobes 1998), some of which include differences in historical antecedents, legal, economic and political trajectories and institutional differences (La Porta, Lopez-de-Silanes & Shleifer 2008).
In theory, when a firm fully complies with all the legal disclosure requirements, it has fulfilled its communication obligations to its investors and regulatory institutions. Therefore, there is no need for voluntary disclosure. Yet, in practice, many firms are observed to have voluntarily disclosed in their reports more information than what is statutorily required by the legal framework of their business environments (Lang & Lundholm 1993). Disclosure is the process by which accounting measurements are communicated to their intended users (Choi & Meek 2008). However, a number of questions, such as what information is to be reported and to what extent, when, how and to whom the company must disclose, needs to be answered. It is argued that the reliance on the disclosure requirements or rules has created some limitations and unfairness in reporting and disclosure (Riahi-Belkaoui 2002). Therefore, theorists and practitioners have begun to recognize the inherent shortcomings of traditional reporting and developed models for additional voluntary disclosure (Schuster & O’Connell 2006). For example, the Jenkins committee was established in 1991, by the AICPA, and published its report in 1995 on the Information Needs of Investors and Creditors. Another example of the attention paid to the issue of voluntary disclosure is the establishment of the Steering Committee in 1998 by the FASB. One of the three reports of this committee is to enhance voluntary disclosure.
