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Antecedents of voluntary corporate governance disclosure: a post-2007/08 financial crisis evidence from the influential UK Combined Code

Mohamed H. Elmagrhi (Financial Ethics and Governance Research Group, Department of Accountancy and Finance, University of Huddersfield, Huddersfield, UK)
Collins G. Ntim (Financial Ethics and Governance Research Group, Department of Accountancy and Finance, University of Huddersfield, Huddersfield, UK)
Yan Wang (Financial Ethics and Governance Research Group, Department of Accountancy and Finance, University of Huddersfield, Huddersfield, UK)

Corporate Governance

ISSN: 1472-0701

Article publication date: 6 June 2016

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Abstract

Purpose

The purpose of this study is to investigate the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms and consequently ascertain whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.

Design/methodology/approach

This study uses one of the largest data sets 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 to address the potential endogeneity issue and 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. The authors 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 negatively affect 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 study 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 2007/2008 global financial crisis. This study 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

Acknowledgements

The authors gratefully acknowledge the insightful and timely suggestions by the Editor, Professor Gabriel Eweje and two anonymous reviewers. Useful comments received at presentations at the British Accounting and Finance Association Annual Conference (Manchester, 2015) and the Financial Ethics and Governance Research Group (Huddersfield, 2015) on the previous versions of this paper are gratefully acknowledged.

Citation

Elmagrhi, M.H., Ntim, C.G. and Wang, Y. (2016), "Antecedents of voluntary corporate governance disclosure: a post-2007/08 financial crisis evidence from the influential UK Combined Code", Corporate Governance, Vol. 16 No. 3, pp. 507-538. https://doi.org/10.1108/CG-01-2016-0006

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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