Antecedents of Voluntary Corporate Governance Disclosure: A Post-2007/08 Financial Crisis Evidence from the Influential UK Combined Code

Mohamed Elmagrhi, Collins Ntim, Yan Wang

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Purpose: This study investigates the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms, and consequently ascertains whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.

Design/Methodology/Approach: The study uses one of the largest datasets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted in order to test the robustness of the findings.

Findings: The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. We also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership impact negatively on voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory.

Originality/Value: This paper extends, as well as contributes to the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/08 global financial crisis. This paper also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.
LanguageEnglish
Pages507-538
Number of pages39
JournalCorporate Governance (Bingley)
Volume16
Issue number3
DOIs
Publication statusPublished - 1 Jun 2016

Fingerprint

Corporate governance
Disclosure
Financial crisis
Prediction
Design methodology
Outside directors
Robustness
Econometric models
Neo-institutional theory
Global financial crisis
Block ownership
Endogeneity
Institutional ownership
Managerial ownership
Ownership structure
Board size
Multiple regression
Fixed effects
Board characteristics
Ownership

Cite this

@article{cf2563c77dff4a1cb85c1c58fa507f86,
title = "Antecedents of Voluntary Corporate Governance Disclosure: A Post-2007/08 Financial Crisis Evidence from the Influential UK Combined Code",
abstract = "Purpose: This study investigates the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms, and consequently ascertains whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.Design/Methodology/Approach: The study uses one of the largest datasets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted in order to test the robustness of the findings.Findings: The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. We also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership impact negatively on voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory.Originality/Value: This paper extends, as well as contributes to the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/08 global financial crisis. This paper also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.",
keywords = "Board and ownership mechanisms, UK Combined Code, Corporate governance, Comply or explain, Neo-institutional theory",
author = "Mohamed Elmagrhi and Collins Ntim and Yan Wang",
year = "2016",
month = "6",
day = "1",
doi = "10.1108/CG-01-2016-0006",
language = "English",
volume = "16",
pages = "507--538",
journal = "Corporate Governance (Bingley)",
issn = "1472-0701",
publisher = "Emerald Group Publishing Ltd.",
number = "3",

}

Antecedents of Voluntary Corporate Governance Disclosure : A Post-2007/08 Financial Crisis Evidence from the Influential UK Combined Code. / Elmagrhi, Mohamed; Ntim, Collins; Wang, Yan.

In: Corporate Governance (Bingley), Vol. 16, No. 3, 01.06.2016, p. 507-538.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Antecedents of Voluntary Corporate Governance Disclosure

T2 - Corporate Governance (Bingley)

AU - Elmagrhi, Mohamed

AU - Ntim, Collins

AU - Wang, Yan

PY - 2016/6/1

Y1 - 2016/6/1

N2 - Purpose: This study investigates the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms, and consequently ascertains whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.Design/Methodology/Approach: The study uses one of the largest datasets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted in order to test the robustness of the findings.Findings: The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. We also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership impact negatively on voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory.Originality/Value: This paper extends, as well as contributes to the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/08 global financial crisis. This paper also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.

AB - Purpose: This study investigates the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms, and consequently ascertains whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.Design/Methodology/Approach: The study uses one of the largest datasets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted in order to test the robustness of the findings.Findings: The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. We also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership impact negatively on voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory.Originality/Value: This paper extends, as well as contributes to the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/08 global financial crisis. This paper also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.

KW - Board and ownership mechanisms

KW - UK Combined Code

KW - Corporate governance

KW - Comply or explain

KW - Neo-institutional theory

U2 - 10.1108/CG-01-2016-0006

DO - 10.1108/CG-01-2016-0006

M3 - Article

VL - 16

SP - 507

EP - 538

JO - Corporate Governance (Bingley)

JF - Corporate Governance (Bingley)

SN - 1472-0701

IS - 3

ER -