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    The association between disclosure quality of forward-looking information and corporate governance mechanisms: evidence from the UK before the financial crisis period

    Al-Najjar, Basil and Abed, S. (2016) The association between disclosure quality of forward-looking information and corporate governance mechanisms: evidence from the UK before the financial crisis period. Managerial Auditing Journal 29 (7), ISSN 0268-6902.

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    Abstract

    PURPOSE: – This paper aims to witness the importance of corporate governance mechanisms and investigates the relationship between the quality of disclosure of forward-looking information in the narrative sections of annual reports and the governance mechanisms for non-financial UK companies. DESIGN/METHODOLOGY/APPROACH: – Computerized content analysis using QSR NVivo 8 is used to measure the extent of forward-looking information in the narratives of the annual reports for 238 companies listed in the London Stock Exchange. Cross-sectional regression analysis is used to examine the impact of the corporate governance mechanisms on forward-looking information. FINDINGS – The results show that board size and the independence of the audit committee are associated with the level of voluntary disclosure of forward-looking information. RESEARCH LIMITATIONS/IMPLICATION – One limitation of this study is that in controls for the effect of the financial crisis period, by selecting a representative year for a five-year period, 2006. The authors argument in using this year is based on the fact that the main variables of interest do not vary significantly with time, the cross-sectional analysis of the selected period will provide a fair view of the last five year-period. PRACTICAL IMPLICATIONS – The authors report the importance of some governance practices in the UK, such as the role of the board members as well as the importance of audit committee independence. ORIGINALITY/VALUE – This paper contributes to the literature by using computerized content analysis to examine the relation between corporate governance mechanism and disclosure quality of forward-looking information using sample of companies before financial crisis period. The authors also examine governance mechanisms that are under-researched in the field of forward-looking disclosure.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Corporate governance, Board independence, Audit committee, Disclosure quality, Forward-looking information, Governance mechanism, M4
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Depositing User: Basil Al-Najjar
    Date Deposited: 29 Apr 2016 14:49
    Last Modified: 29 Apr 2016 14:49
    URI: http://eprints.bbk.ac.uk/id/eprint/15045

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