Financial disclosures and corporate governance a comparative study of large and medium sized companies

Abstract

This research is a comprehensive study to analyse the interrelated aspects of financial disclosures and corporate governance with the help of empirical methods. Studies related to corporate governance and financial disclosures around the world started as early as 1961 but developments in India on this score have been particularly slow. This is due to the fact that till 1991, India followed a closed system of economic development where foreign players were not encouraged to participate in the market. The situation changed after liberalization as corporate governance came to be then seen in an international context. Resultantly, the focus on corporate governance increased and related rules and regulations started to be framed. This research examines existing corporate governance mechanisms of listed Indian firms, both large and medium scale, from the year 2002 to the year 2009. It provides a complete picture about what determines corporate governance disclosures of listed Indian companies. The study investigates the determinants of firm-level corporate governance disclosure among listed Indian companies, aiming to identify firm characteristics associated with high corporate governance disclosures. By addressing itself to understanding firm attributes which impact corporate governance and examining those attributes that have a direct linkage with corporate governance disclosures in India, the study aims to suggest how to augment corporate governance disclosures in listed Indian companies. By examining corporate governance disclosures over a period of eight financial years, the study documents evidence that it is possible that firms change their disclosure behaviour over time. The study is motivated by the need to understand one element of corporate governance i.e. disclosure, in the context of the Indian environment. This line of research helps to understand what can lead companies to improve their governance practices as regards financial disclosure.