Corporate governance and voluntary disclosures in annual reports: a post-International Financial Reporting Standard adoption evidence from an emerging capital market

Purpose – The purpose of this paper is to provide an empirical evidence concerning the in ﬂ uence of Corporate governance and voluntary disclosures in annual reports: a post-International Financial Reporting Standards adoptionevidencefrom anemerging capitalmarket. Design/methodology/approach – Data were collected from the annual reports of all 22 listed non-ﬁ nancial ﬁ rms over a ﬁ ve-year period. Using content analysis, the audited annual reports of the ﬁ rms were scored on the extent of overall and four speci ﬁ c types of voluntary disclosures made. The panel data obtained were analyzedusinga generalizedordinaryleast squaresregression model. Findings – The ﬁ ndings of the study show that voluntary disclosures among the ﬁ rms are low even after the adoption of IFRS. Corporate governance attributes of board size and board leadership structure are signi ﬁ cant determinants of the extent of voluntary disclosures made by the ﬁ rms. However, board independence and auditor type exhibit only a signi ﬁ cant positive effect on voluntary ﬁ nancial and forward-lookinginformationdisclosures.


Introduction
Corporate governance systems, including issues of information disclosures and transparency, have witnessed significant improvements in developed economies following the devastating collapse of many corporate giants, such as Enron in the USA and Parmalat in the European Union (EU).However, developing economies, including Ghana, continue to lag behind, despite efforts at improving overall corporate governance (Papadopoulos, 2019).Ghana's adoption of international financial reporting standards (IFRS) and corporate governance best practice guidelines, in 2007 and 2010, respectively, were expected to improve overall firm-level corporate governance, financial reporting, information disclosure and transparency (Appiah et al., 2016;Tawiah and Boolaky, 2019).Scholars have suggested that mandatory adoption of IFRS and its effective compliance among firms is a function of firm-level corporate governance practices and other firm characteristics (Horton et al., 2012;Tawiah and Boolaky, et al., 2019;Appiah et al., 2016;Barako, 2007).Despite the adoption of IFRS and implementation of corporate governance guidelines, the capital market witnessed major corporate scandals and failurese.g.UT Bank and Capital Bank (Ansah, 2017).This calls into question whether the mandatory adoption of IFRS and corporate governance best practices guidelines have had any significant impact on the information disclosure and transparency environment of Ghana.Thus, in this study, we examine the influence of firmlevel corporate governance practices on the extent of voluntary disclosures by listed firms.
While interest in disclosure research has surged over the past three decades, the plethora of studies has rather concentrated on advanced economies in Europe and the USA (S tef anescu et al., 2012;Boesso et al., 2007;Barros et al., 2013) with scant evidence on developing economies, particularly Africa (Adelopo et al., 2011;Barako, 2007;Rouf, 2011;Appiah et al., 2016).Scholars have highlighted that enhanced disclosures by firms in developing economies can strengthen their corporate brands, attract foreign investment, lower cost of capital, reduce political and regulation intervention and enable firms to function within a productive and responsible framework (Hongxia and Ainian et al., 2008;Chan et al., 2014;Hermalin and Weisbach, 2012;Entwistle, 1997).
There are several channels for communicating important corporate information, including internet websites and press releases (Healy and Palepu, 2001).However, the audited annual report remains the most important and credible medium for communicating corporate transparency and voluntary disclosures, including financial and non-financial information (Nandi and Ghosh, et al., 2012;Neu et al., 1998).Unlike other channels, the annual report is subject to strict regulation and scrutiny by external auditors, hence is relied on by firms' relevant publics (Neu et al., 1998).As such, firms invest significant amount of time, energy and money in generating and circulating their annual reports every year, as they acknowledge the ability of its content to influence the perception of its relevant publics and promote corporate legitimacy (Neu et al., 1998).

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In Ghana, public companies are required to place an audited annual report before shareholders at an annual general meeting with copies filed with the Ghana Stock Exchange (GSE) and Securities and Exchange Commission (SEC).This is part of the strategy to promote high levels of disclosure and transparency environment.Additionally, the GSE listing rules provide the timeframe within which annual reports must be circulated, whereas the Companies Code (supported by the GSE listing rules) requires listed firms to disclose key information such as members of the board and key executives, directors' material interests in transactions or contracts affecting the company and so on.Indeed, the annual report is an authoritative reference document and offers a one-stop-shop for all corporate stakeholders in Ghana, who seek credible information to aid them in making economic and other important decisions.Thus, examining voluntary disclosures in the annual reports are key to understanding the legitimacy, credibility and transparency of firms and the institutional environment within which they function.
Ghana provides a peculiar setting and rationale for this research for several reasons.First, as a developing economy in Africa, Ghana is plagued by low adherence to global benchmarks (World Bank ROSC, Nobes, 2011), blamed on weak institutional and regulatory framework (Bova and Pereira, 2012).More so, due to the low contribution of the capital market to economic growth, Ghana is often ignored in many studies (Nnadi and Soobaroyen, 2015;Tawiah and Boolaky, 2019).What is more, the significant differences in financing, ownership and governance structures between developing and developed economies (La Porta et al., 1999;Gordon et al., 2012;Nnadi and Soobaroyen, 2015) provides further rationale for this research.Whereas companies in the USA, Europe and elsewhere have large numbers of dispersed and active minority shareholders, majority of African firms is saturated with blocks and internal shareholdings, with very few non-active external shareholders.African, and particularly Ghanaian, firms are generally highly levered, underscoring their dependence on sources of finance outside the capital market (Ntim, 2013).This is in sharp contrast to most firms outside Africa that rely principally on the stock exchanges (Agyei-Mensah, et al., 2017;Tsamenyi et al., 2007).Consequently, we can expect significant differences in the level of information disclosures.
We argue that because most Ghanaian firms rely heavily on external sources of finance outside the stock market, their voluntary disclosure policy and associated factors will differ from the extant literature on Europe, the USA and Asia.Thus, Ghanaian companies may use other channels apart from the annual reports to disclose additional information that meet the expectation and requirement of stakeholders primarily outside of the capital market.Finally, Ghana's adoption of IFRS and corporate governance best practice guidelines afford us the opportunity to investigate and compare the voluntary disclosure regime post-IFRS in this study to other studies done prior to the adoption and implementation of IFRS.
Therefore, in this study, we use five-year panel data post-IFRS adoption in 2007 to examine the effect of firm-level corporate governance mechanisms on the extent of voluntary disclosures in audited annual reports of all 22 listed non-financial companies on the GSE.In line with prior studies (Barako, 2007;Adelopo, 2011;Dey et al., 2020), we used a content analysis methodology to score the voluntary disclosures.The panel data constructed is analyzed using a generalized ordinary least squares (OLS) regression.Our results reveal that voluntary disclosures remains critically low among listed firms in Ghana despite IFRS adoption.Further, we document that all corporate governance variables used in this study predict at least two of the specific types of voluntary disclosures in annual reports.Particularly, board size and CEO duality positively influence the extent of overall voluntary disclosures of the selected firms, whereas board independence and auditor type drive only financial data and forward-looking information disclosures.The result with respect to board independence highlights the emphasis placed on board monitoring function when Corporate governance a firm faces significant agency costs, requiring the need for increased financial and forwardlooking information to reduce information asymmetries (Inchausti, 1997).
While our study is not the first to examine the transparency and disclosure regime of listed firms in Africa, and Ghana in particular, it differs significantly from other studies and makes incremental contributions to literature in four ways.First, unlike other voluntary disclosure studies in Ghana and Africa (Tsamenyi et al., 2007;Bopkin and Isshaq et al., 2009;Albitar et al., 2020;Borgi and Mnif, 2021), our study provides further insight by disaggregating firm's voluntary disclosures into specific types of voluntary disclosures.The disaggregation of voluntary disclosure into categories is considered desirable as it mimics variations in decision relevance for users (Meek et al., 1995;Ho and Taylor, 2013).We disaggregate voluntary disclosure into four categories: general and strategic information, financial information, forward-looking information and social and board disclosures.Second, our focus on post-IFRS adoption period enables us to compare the voluntary disclosure regime of corporate Ghana with similar prior studies (Tsamenyi et al., 2007;Bopkin and Isshaq, 2009) that pre-dates IFRS adoption.Prior studies document improved reporting quality following IFRS adoption, evidenced by voluntary information content, among others (Barth et al., 2008;Landsman et al., 2012).Our results do not support the assertion that IFRS adoption will automatically lead to increased transparency through the voluntary disclosure of information.Third, our study departs from studies that focus on examining listed firms' compliance with mandatory IFRS to examine the extent of voluntary disclosure in annual reports as additional transparency characteristics.Finally, we focus on key corporate governance variables that have not been previously examined with respect to voluntary disclosures by listed firms in Ghana.Prior studies focused on either ownership and/or non-corporate governance firm characteristics (Tsamenyi et al., 2007;Appiah et al., 2016).
The remainder of this paper is organized as follows.Section 2 discusses the literature review and outlines prior empirical findings as well as the development of hypotheses.Section 3 discusses the methods that were used.Presentation and discussion of the results are done in Section 4. Finally, conclusions, implications, limitations of the study as well as direction for further research are discussed in Section 5.

Literature review 2.1 Corporate governance in Ghana
Prior to the year 2010, Ghana had no specific corporate governance best practice guidelines to streamline the corporate governance landscape.The corporate governance system was solely based on precise regulatory frameworks and laws, namely, the Ghana Companies Code 1963 (Act 179), the Securities Industry Law (1993) (PNDCL 333) as revised by the Securities Industry Act, 2000 (Act 590) and the listing regulations, 1990 (L. I. 1509) of the GSE.Moreover, the Institute of Chartered Accountants (Ghana) provided further support by issuing and administering the Codes of Conduct and the Ghana National Accounting Standards (replaced with IFRS since 2007).In 2010, the SEC introduced a code of best practices on corporate governance that was based on the principles of good corporate governance by the Organization of Economic Cooperation and Development (OECD, 2004) as an additional guideline to augment the existing regulations and laws.Having been colonized by the British, Ghana's laws and, by extension, its corporate governance framework largely mimics that of the British, which is based on an Anglo-Saxon model (Adegbite, 2012).
To promote a disclosure and transparency regime, the GSE listing regulations require listed companies to provide key information to investors that bothers on the board of directors and key management, including their compensations, material foreseeable risks, major share ownership and voting rights, company's financial operating results and so on.

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Furthermore, the regulations stipulate the period within which companies are to distribute their audited annual reports to appropriate quarters.Both the Companies Code and GSE listing regulations also mandate listed companies to establish an audit committee to assist the board of directors to provide effective monitoring and financial reporting.Enshrined in the Code are also provisions relating to the appointment, removal and retirement of directors (Tsamenyi et al., 2007;Amartey et al., 2019).Some of the guidelines enshrined in the 2010 SEC code of best practice include the separation of the roles of the board chair and CEO, with a precise statement of the responsibilities of each role, the definition of an independent director, the responsibilities of the board of directors and so on (Agyemang and Castellini, 2013).These provisions define the disclosure and transparency environment of Ghana.
Several scholars (Kuranchie-Pong et al., 2016;Agyemang and Castellini, 2013;Okeahalam, 2004) have acknowledged poor implementation or enforcement of laws and regulations as the bane of a sound system of corporate governance among most developing economies, including Ghana.These scholars argue that the challenge of corporate governance does not stem from inadequate laws and regulations.For instance, Kuranchie-Pong et al. (2016), in a study of the disclosure and risk-taking propensity of banks in Ghana, concluded that market discipline is ineffective in Ghana.Also, a World Bank (2005) report indicated that listed companies in Ghana had board members who were ineffective at supervising firm-level corporate governance, attributing this to questionable board independence or NEDs who act as rubber stamps for decisions (Okeahalam, 2004).The same report also indicted audit committees for their lack of effectiveness to function as expected.Among some of the issues and challenges identified as inhibiting sound corporate governance in Africa and Ghana, in particular, are ineffectiveness of boards, poor monitoring and transparency of financial statements, government interference of companies' affairs, corruption among other factors (Adegbite, 2012;Agyemang and Castellini, 2013;Okeahalam, 2004).Consequently, if these issues are addressed, corporate governance will be improved: transparency enhanced, minority shareholders protected, boards become more effective in performing their functions, etc., leading to more confidence in the capital market (Agyemang and Castellini, 2013).

Voluntary versus mandatory disclosures
Disclosure research comes in two perspectives, namely, mandatory and voluntary disclosures.While mandatory disclosure research examines the extent of compliance of firms to appropriate financial reporting and legal regulations and standards (Tsalavoutas et al., 2011;Appiah et al., 2016), voluntary disclosure research investigates the level and quality of information transparency within a firm as a function of the overall efficiency of corporate governance of national economies (Barako, 2007;Nandi and Ghosh, 2012).There is, however, an increasing demand and motivation for voluntary disclosure research compared to mandatory disclosure research.This has been attributed to the general dissatisfaction with mandatory disclosures to forestall corporate scandals and capital market failures in many economies (Binh, 2012;Hongxia and Ainian, 2008).
Enhanced voluntary disclosures in the annual reports are deemed to reflect corporate governance effectiveness and yield numerous benefits for companies, corporate managers, shareholders and other corporate stakeholders.A good disclosure policy is a means to mitigate information asymmetry between corporate managers and shareholders, thus reducing agency costs (Jensen and Meckling, 1976).In a similar vein, the cost of information conveyed by large transactions is lower for firms that provide more disclosures about their operations, implying that voluntary disclosure reduces information asymmetries between investors, which ultimately mitigate transaction cost (Chan et al., 2014;Diamond and Verrecchia, 1991).In general, corporate disclosures are considered a critical factor for the functioning of an efficient capital market (Healy and Palepu, 2001).

Theoretical background and hypotheses
A range of theories have been used to explain corporate disclosure.Early theories regarding this issue assumed that corporate managers are interested only in the firm's market value (Clarkson et al., 1994;Grossman, 1981).Rational investors are aware that firms with encouraging private information are more likely to disclose information to the market to ensure that the value of the firm is enhanced.Therefore, non-disclosure is explained as withholding adverse information, leading to a reduction in firm value.This idea leads to a full disclosure where firms reasonably and voluntarily disclose important information to enhance the value of the firm (Clarkson et al., 1994).Nevertheless, in practice, companies fail to attain the level of full disclosure, bringing to mind that the decision to voluntarily disclose relevant information have to do with additional elements.
Both legitimacy and political theories also offer explanations for differences in the level of corporate disclosure.Legitimacy theory, rooted in political economy theory (Gray et al., 1996), advances the notion that a firm's legitimacy to operate in society is dependent on the social contract that is implicit in nature between the firm and society.Corporate managers persistently make the very effort to ensure that their firm operates within its social contract by ensuring that its operations fall within the expectations of the society.With this, corporate managers have the incentive to disclose information that shows that the firm is operating to meet societal norms and expectations (Deegan and Blomquist, 2006).Meanwhile, the political economy theory postulates that society, politics and economics are inseparable and economic issues cannot be investigated painstakingly without referring to the social, political and institutional structure in which the issue happens.An investigation into the political economy allows corporate governance researchers to mull over wider issues about the information corporate managers choose to disclose in the firm's annual reports ( Kent and Stewart, 2008;Gray et al., 1996).
Additional explanation for information disclosure in corporate annual reports is offered by the principal-agent (agency) theory.Corporate managers have incentives to withhold information to restrict the ability of the market to effectively monitor their performance, thus creating a "disclosure agency problem."Studies have investigated whether this problem is reduced by a good corporate governance structure (Adel et al., 2019;Agyei-Mensah et al., 2017;Chan et al., 2014;Khan et al., 2013;Beekes and Brown, 2006).We extend these extant studies by investigating whether corporate governance provides an explanation for the level of voluntary disclosure.Thus, notwithstanding the alternative theories of voluntary disclosure of firms explained above, our attention is on the relationship between voluntary disclosure and corporate governance.
Theory highlights that a good corporate governance structure must result in a more transparent disclosure of information (Albitar et al., 2020;Adel et al., 2019;Majumder et al., 2017;Chan et al., 2014).A major role of corporate governance is to ensure compliance with financial reporting requirements and to ensure financial statements depict the full financial standing of the firm (Davidson et al., 2005;Dechow et al., 1995).Nevertheless, the findings of previous studies have been inconclusive (see meta-analytical review by Majumder et al., 2017).One view advanced is that disclosure is a mechanism of corporate governance that can substitute for other corporate governance elements (Eng and Mak, 2003).Even though, we partly agree to this argument, our hypotheses development is based on the support reported by Beekes and Brown (2006, p. 423) "for the proposition that better-governed [firms] make more informative disclosures."Given that the more extensive voluntary disclosures are likely to be enlightening, we anticipate a positive relationship between the IJAIM level of voluntary disclosures and recognized elements of corporate governance within the Ghanaian context.This forms the basis of our hypotheses.

Board size
Corporate governance scholars recognize the board of directors as the most relevant control element in a firm's internal governance structure (Albitar et al., 2020;Chan et al., 2014;Khan et al., 2013;Fama and Jensen, 1983).A good and effective board should monitor financial discretion as well as ensure accounting choices made by corporate managers are valid (Kent and Stewart, 2008).Board size is possibly related to the ability of corporate directors to monitor, control and evaluate corporate managers (Albitar et al., 2020;Agyei-Mensah, et al., 2017;Chan et al., 2014), even though the direction of influence is inconclusive (Albitar et al., 2020;Agyei-Mensah, 2017).Some studies have highlighted a positive relationship between the number of board directors and both board monitoring (Williams et al., 2005;Anderson et al., 2004) and company performance (Ansong, 2015; Agyemang et al., 2014;Haniffa and Hudaib, 2006).It is contended that larger boards have the expertise and are better positioned to monitor and evaluate corporate managers (Albitar et al., 2020;Agyei-Mensah et al., 2017;Chan et al., 2014;Ansong, 2015;Agyemang et al., 2014), thus enhancing the transparency and management disclosure of more information (Majumder et al., 2017;Agyei-Mensah, et al., 2017;Ahktaruddin et al., 2009).By contrast, other extant studies highlight that smaller boards are more effective in monitoring the CEO and limit the possibility to engage in pervasive decisions (Cheng and Courtenay, 2006;Beasley, 1996;Lipton and Lorsch, 1992;Jensen, 1983).While it is true that larger boards do increase the monitoring capacities of the BOD, such benefit may be mitigated by the increasing cost of poorer communication and decisionmaking associated with larger groups (John and Senbet, 1998).Notwithstanding the counter view, we argue that a larger board will result in better perspectives in decision-making, implying that firms with a larger board size are likely to disclose more voluntary information.Hence, we hypothesize, in line with agency theory and several recent studies, that: H1.Firms with a larger board size have a higher extent of voluntary disclosures.

Chief executive officer duality
Another corporate governance attribute that is associated with strong corporate governance is the separation of the roles of the chief executive officer (CEO) and board chairperson.Guidelines of corporate governance assume that the ability of the board to perform a monitoring and evaluating role is weakened when the CEO is also the board chair (Cadbury Committee, 1992; Guidelines of corporate governance of the Ghana Securities and Exchanges Commission, 2010).The selection and appointment of the CEO to the position of the board chairperson may results in power concentration and potential conflicts of interest, which can lead to a reduction in the level of monitoring (Adel et al., 2019;Majumder et al., 2017;Chan et al., 2014;Haniffa and Cooke, 2002).The agency theory criticizes the combined structure, where the CEO doubles as board chair (CEO duality) and predicts that the interests of the owners will be sacrificed to a degree in favor of management, leading to managerial opportunism and agency loss (Adel et al., 2019;Chan et al., 2014;Kent and Stewart, 2008).Mohamad and Sulong (2010) argue that CEO duality structure could result in the probability of withholding unfavorable information from outsiders by the CEO/chair and promote opportunistic behavior by the CEO.Thus, a two-tier leadership structure of the board (i.e.separation of roles between CEO and board chair) is considered a more effective mechanism against opportunistic behavior by the CEO and ensures adequate information disclosure to relevant stakeholders (Adel et al., 2019;Majumder et al., 2017;Li et al., 2008).Available empirical studies on CEO duality show inconclusive findings (Adel et al., 2019;Michelon and Parbonetti, 2012).While some studies report significant positive relationships (Jizi et al., 2014;Wang and Hussainey, 2013;Rouf, 2011;Barako, 2007), others report significant negative relationship (Michelon and Parbonetti, 2012;Gul and Leung, 2004).Moreover, other studies found no relationship (Majumder et al., 2017;Cheng and Courtenay, 2006).We sympathize with the agency view, thus, we expect a negative relationship between CEO duality structure and the extent of voluntary disclosures.Hence, we hypothesize that: H2. Firms with a CEO Duality structure of the board have a lower extent of voluntary disclosures.

Board composition
A company's board usually comprises executive and non-executive directors (NEDs).NEDs are those whose only affiliation with the company is because of their directorship, whereas executive directors are part of the management of the firm.The agency theory suggests that a greater proportion of NEDs on the board is a valuable corporate governance mechanism that ensures effective monitoring of corporate managers in the presence of agency conflicts (Majumder et al., 2017;Ajinkya et al., 2005;Patteli et al., 2007).Arcay and V azquez (2005) (2014), this finding may be attributed to the existence of complacency in the appointment of independent competent directors to join the board.Yet still, other studies document rather a negative relationship (Barako et al., 2006;Gul and Leung et al., 2004).This, as suggested by Barako et al. (2006), may be because a high level of independent directors may, itself, substitute for the need to rely on corporate reporting to assure stakeholders on the legitimacy of the firm's operations.Our view, notwithstanding, is consistent with the agency theory, and we further argue that a higher number of NEDs on the board may promote corporate legitimacy by increasing voluntary reporting to satisfy various stakeholders.Hence, we hypothesize that: H3. Firms with a higher proportion of non-executive directors on the board have a higher extent of voluntary disclosures.

Auditor type
Jensen and Meckling (1976) consider external auditors as an important governance mechanism because they are entrusted with rendering a fair opinion on the quality of disclosed information.Auditors' reports, thus, provide certifications, which reduces agency costs because it improves users' perception of the credibility of the information in the annual reports.Meanwhile, DeAngelo (1981) and Barros et al. (2013) argue for auditor size as a proxy for audit quality.Bigger audit firms possess stronger bargaining power to demand improved disclosures from their clients (Adelopo, 2011) and are considered to provide credibility to their clients (Majumder et al., 2017).Furthermore, they are well known for their high professionalism and their desire to enhance voluntary disclosures in annual reports of their clients (Agyemang et al., 2015).From the agency theoretical perspective, auditor plays an effective monitoring mechanism on the conflict between IJAIM the managers and shareholders, i.e. the agent-principal relationship (Lim et al., 2008).Moreover, auditors' credibility, which is underpinned by their recommendations, approval of choosing accounting standards and explanations of critical issues, influences the firm's attitude regarding reporting and disclosure practices (Khan et al., 2013).Furthermore, the selection of a firm's external auditors may influence the perception of relevant publics and either facilitate or inhibit its organizational legitimacy (Ruiz-Barbadillo and Martínez-Ferrero, 2021).Reputable audit and assurance firms (i.e.Big 4 audit firms) are perceived to possess the capacity to provide assurance services in the form of sustainability reporting and disclosures that meet the expectation of relevant stakeholders, thus positively influencing the firm's legitimacy (Ruiz-Barbadillo and Martínez-Ferrero, 2021).Several empirical studies lend support to this theoretical position (Sundarasen et al., 2016;Adelopo, 2011;A gca and Önder, 2007;Barako, 2007).By contrast, other studies indicate insignificant positive (Lu and Abeysekera et al., 2014;Lim et al., 2008) and insignificant negative (Ling and Sultana, 2015;Alotaibi and Hussainey, 2016) relationships.Nonetheless, our argument is sympathetic toward the agency perspective, hence our hypothesis that: H4. Firms that use the services of a Big 4 audit firm have a higher extent of voluntary disclosures.

Research methodology 3.1 Sample selection and data source
A criterion sampling technique was adopted for the study.All listed non-financial companies listed with equity on the GSE were selected.Financial companies were excluded from the study because the sector is highly regulated and as such regulations tend to blur the relationship among the variables to be studied (Desai and Dharmapala, 2009;Abdul-Wahab, 2010).The final sample consisted of 22 listed non-financial companies with active trading activities continuously over five years.This culminated into a total number ranging between 101 and 109 observations for the unbalanced panel data.

Measurement of variables
Voluntary disclosure is the dependent variable, and it was measured by adapting the disclosure checklist of Barako (2007) (see adapted voluntary disclosure checklist in Appendix).Voluntary disclosure was measured by the quantity and depth of non-mandatory information or data that is contained in the management discussion and analysis in the audited annual reports.Each sample firm's annual report was scored on the level of general and strategic information, financial data, forward-looking information and social and board disclosure that is voluntarily disclosed.Barako's checklist was adapted for this study because it followed a well-planned and comprehensive methodology (Barako, 2007; for details).In addition, a review by experts from the Institute of Chartered Accountants (Ghana), GSE, SEC and Big 4 audit firms was done to confirm the appropriateness and adequacy of the checklist for the Ghanaian context (Barako, 2007).Two crucial and contentious issues in previous studies on the scoring of disclosure items are apparent: whether the disclosure items should be weighted (Courtis et al., 1979;Barrett, 1976;Abdullah et al., 2015;Tsalavoutas, 2011;Street and Gray, 2002) or non-weighted (Wallace, 1988;Cooke, 1991;Hossain, 1994).Both approaches have received criticisms.Disclosure index was scored using a non-weighted approach.The only argument raised against this approach is the fact that it assumes fundamentally that all items in the checklist are equally important, which may not be necessarily true.Notwithstanding, previous studies have shown that both non-weighted and weighted scores similar results (Barako, 2007;Firth, 1979).This is underscored by the fact that in a weighted scoring approach, the subjective weights of user groups will average each other out (Cooke, 1989).
Complete audited annual report for each firm was reviewed to understand the nature and complexity of each firm's operation and to form an opinion about the firm before scoring the items.Thus, a firm was scored "1" for an item disclosed in the annual report and "0" if it is not disclosed.The voluntary disclosure score (VDScore) was then computed for each firm as a ratio of the total voluntary disclosure score (TVDScore) for the firm to the maximum voluntary disclosure score (VDMax) possible.The disclosure score (VDScore) for each firm was then expressed as a percentage.The same procedure was used for the categories of voluntary disclosure.Below is a mathematical representation of the voluntary disclosure score (VDScore):  The natural logarithm of the total assets of the firm Firm's net profit after tax divided by its net assets and expressed as a percentage Firm's total debts divided by its total assets IJAIM variables of firm-specific characteristics are firm size proxied with firm's total assets, profitability (return on assets) and leverage.

Control variables
Many disclosure studies have provided evidence that firm-specific characteristics such as size, profitability and leverage are significant determinants of corporate voluntary disclosures in annual reports (Adelopo et al., 2011;Nandi and Ghosh, 2012;Samaha et al., 2012;Wang and Hussainey, 2013;Tawiah and Boolaky, 2019).Agency costs are associated with the separation of management from ownership, which is likely to be greater in larger companies (Jensen and Meckling, 1976).Thus, larger firms are likely to provide more information than smaller firms as a means of reducing agency (monitoring) costs.Alsaeed (2006), Aljifri et al. (2012) and Alkhatib (2014) acknowledged that highly leveraged firms may deal with higher agency costs due to higher auditing fees.Thus, they argue for more information (voluntary) disclosure in annual reports of such firms as a means of reducing such costs.Lastly, the agency theory suggests that managers of larger profitable firms may wish to disclose more information to obtain personal advantages like the continuance of their management position and compensation (Inchausti, 1997).Based on these theoretical arguments backed by empirical evidence, we anticipate that there should be a significant positive relationship between the control variables and the extent of voluntary disclosures in the annual reports.

Model specification
Below is the generalized least square pooled regression model, which was fitted to the data to assess the effect of each independent variable on the disclosure data associated with the voluntary disclosure score (VDScore) and categories and to test the associated hypothesis: where: VDScore = is total voluntary disclosure score; GenStgInf = is general and strategic information sub-category of VDScore; FinData = is financial data sub-category of VDScore; FwdlkInf = is forward-looking information sub-category of VDScore; SocBdInf = is social and board disclosure sub-category of VDScore; BSZE = is board size; CEODUAL = is CEO duality; PNED = is proportion of NEDs; AUDTYP = is auditor type; FSZE = is firm size; ROA = is return on assets; LEV = is leverage; a = is total constant; and m = is the error term.

Descriptive statistics
Table 2 presents the descriptive statistics and normality test of the variables in the study.We report the mean, standard deviation, minimum and maximum, as well as the skewness test, of the variables.An average of 0.32 with minimum and maximum values of 0.10 and 0.67, respectively, of the overall voluntary disclosure score indicate wide variations in the extent of the firms' disclosure of voluntary information.Approximately, on average, only 15 out of the 48 total items of the disclosure checklist were disclosed by the firms.This result is consistent with prior studies that reported low disclosure scores of firms in Ghana pre-IFRS adoption (Tsamenyi et al., 2007;Bopkin and Isshaq, 2009), suggesting that Ghana's adoption of IFRS is yet to improve the information environment of the country.The table shows an average board size of approximately eight members with minimum and maximum values of 3 and 12, respectively.We also document a mean value of 0.84 with minimum and maximum values of 0.00 and 1.00, respectively, for board leadership, implying that majority of the firms had two different persons occupying the position of board chair and CEO, respectively.Concerning the auditor type, we report a mean of 0.81 and minimum and maximum of 0.00 and 1.00, respectively, suggesting that about 81% of the listed firms in Ghana engage the services of a "Big 4" audit firm.On proportion of NEDs on the board, we report a mean of 0.77 with minimum and maximum values of 0.40 and 0.91, respectively.This result suggests that board independence may be generally high among Ghanaian listed firms.
Our normality skewness test suggest that all the predictive variables are not normally distributed, implying that a non-parametric test is required to establish the correlation (Harwell, 1988).Thus, we use the non-parametric Spearman's rho correlation analysis

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summarized in Table 3.The results largely indicate that there were no multicollinearity problems among the variables as indicated by the variance inflation factor (VIF) test reported in the regression tables.All the VIF values reported were below the conservative threshold of 2.5 (Pallant, 2007).
To mitigate the potential effect of model misspecification and bias results, we perform different pre-regression and diagnosis test, including autocorrelation and heteroscedastic check.The results from these analyses confirm the robust of our findings in explaining the determinants of voluntary disclosures in Ghana.

Main results
The results of the pooled OLS regression are presented in Table 4.Further analyses are provided in Table 5 to highlight how the independent variables predicted the extent of specific

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types of voluntary disclosures.To accommodate the panel data, year dummies were included in each of the equations.We document a significant explanatory power with R 2 of 0.51.This is confirmed by the significant F-value of 13.76 (p-value = 0.00).The R 2 value suggests that approximately 51% of the variation in the voluntary disclosure can be explained by the variations in the whole set of the independent variables.The model can be considered reliable.

Corporate governance and overall voluntary disclosure
The results presented in Table 4 indicate that two of the corporate governance variables had significant effects (p < 0.01) on the extent of overall voluntary disclosure in the annual reports.These are size of the board of directors and CEO duality.Meanwhile, the control variable of firm size also recorded a significant (p < 0.01) effect on the overall voluntary disclosure score.Additionally, the direction for all the variables are as hypothesized, implying that a relatively larger board size, dual leadership structure of the board and a bigger firm size enhances the disclosure of firms, lending support to the agency theoretical position as discussed in the literature review section.These results are consistent with the evidence provided in empirical literature (Nandi and Ghosh, 2012;Samaha et al., 2012;Rouf, 2011;Ahktaruddin et al., 2009).Contrary to expectation, the results for the proportion of NEDs (board independence) and auditor typegovernance mechanisms deemed to have significant positive influence on a firm's disclosure policyindicate that these variables do not significantly affect the disclosure policies.With respect to the board composition, Eng and Mak (2003) argue that there is a substitute relationship between outside (non-executive) directors and disclosure in monitoring managers.Thus, with the increase in outside (non-executive) directors, disclosure may not be enhanced, and this provides a possible explanation in the Ghanaian case.Another possible reason is provided in the empirical work of Agyemang and Castellini (2013), who observed that in Ghana, majority of directors are appointed by controlling shareholders and, thus, their independence remains a problem or huge challengei.e. they may not have the independence required to make judgments regarding disclosure policies or perhaps, they may make private disclosures that serve the interests of the controlling shareholders only.

Corporate governance
Even though, the engagement of a "Big 4" audit firm may lead to increased disclosures due to the expertise and reputation of these firms to demand better and increased disclosures from clients, this may not necessarily be the case for most of the firms in the study because of the cost implications associated with increased disclosures in the annual reports.The results are, however, consistent with evidence provided by Nandi and Ghosh (2012), Rouf (2011) and Barako (2007), all of whom found no significant relationship between the auditor type variable and corporate voluntary disclosure.

Corporate governance and specific types of voluntary disclosure
To provide more insight into the kinds of information that is provided by firms via the annual reports, we have undertaken a further examination of the effects of the governance variables and firm-specific characteristics on the specific types of voluntary disclosures.Four different categories of voluntary disclosures are examined.They are general and strategic information, financial data, forward-looking information and social and board information.The results for the analyses are provided in Table 5.
The results indicate that all four governance variables significantly predicted at least one of the categories of voluntary disclosure.CEO duality variable was significant for all the four categories of voluntary disclosure and the direction for the relationship were as hypothesized except for the forward-looking information category, which showed a negative relationship.Thus, firms that practice a separate leadership structure make less voluntary forward-looking disclosure in the annual reports.Possible explanations may be linked to a strategic view of voluntary forward-looking disclosures that may lead the board chair to limit such disclosures in the annual report.First, the board chairperson may deliberately withhold such information because they are proprietary in nature and can be used by competitors to outcompete the firm.Second, such forward-looking disclosures can arouse high expectations from other stakeholders and can lead them to scrutinize and pressurize top management to meet these expectations.
The variables of board size and auditor type were significant for three of the disclosure subcategories.The directions for the board size were in consonance with hypotheses.Meanwhile, board size was not significant for the forward-looking information category.The explanation given in respect of the CEO duality applies in this case as well.Interestingly, while the auditor type variable was not significant for the social and board information category, the direction for the general and strategic information category was rather contrary to the hypothesis.Thus, the use of a "Big 4" audit firm does not necessarily imply an increased disclosure of social and board information in the annual report.Meanwhile, it leads to a reduction in the disclosure of general and strategic information in the annual reports.In the first instance, the phenomenon may be due to the fact that regulators do not require a strict adherence to corporate governance principles as in the case of other countries.As such, these highcaliber audit firms may not necessarily place premium in demanding clients to disclose such information, bearing in mind the cost involved in increasing such disclosures.In the second instance, the reason may be that "Big 4" audit firm may demand clients to disclose high-quality informationnot in terms of volumeby means of chairman's and/or CEO's statements rather than the mere making of disclosures, which they consider as unnecessary to the needs of users of the annual report.
The variable of board compositioni.e. the proportion of NEDs on the boardfailed to predict any of the categories of voluntary disclosure except for the financial data category, which showed a direction contrary to expectation.As previously explained, there is a substitute relationship between NEDs and disclosure in monitoring managers (Eng and IJAIM Mak, 2003); thus, the presence of NEDs may not necessarily lead to increases in any of the categories of disclosures in the annual report.The result for the financial data category, however, is consistent with the evidence provided by Eng and Mak (2003) in the case of Singaporean listed companies.
With respect to the control variables, only firm size was significant for all the disclosure categories, except for social and board information category and in the predicted direction.Firm size has been consistently found to be a significant and positive determinant of a firm's disclosure policy (Barako et al., 2007;Ahktaruddin et al., 2009;Eng and Mak, 2003;Rouf, 2011;Nandi and Ghosh, 2012).Leverage was significant in only one occasion, i.e. forwardlooking information category.The direction suggests that highly geared firms make less disclosure of forward-looking information in the annual reports.This is probably not surprising because highly geared firms may demand forward-looking information via other private means and not the annual report, which is primarily for shareholders.Firm's profitability was not significant for any of the categories of disclosures.

Conclusion
The main purpose of this study was to examine the relationship between corporate governance variables and the extent of voluntary disclosure s in the annual reports of listed non-financial firms in Ghana.First, we sought to determine the level of overall and specific types of voluntary disclosures made in the annual reports of the sampled firms for the study period.Secondly, we examined the effects of selected corporate governance variables on overall and specific types of voluntary disclosures in the annual reports while controlling for some firm-specific characteristics.
The study revealed that voluntary disclosures of listed non-financial Ghanaian companies are generally very low at approximately 32% and vary widely among the firms.Also, the study found only marginal growth in the voluntary disclosures over the study period.Moreover, the significant impact of board size and leadership structure of on overall voluntary disclosure of the firms is highlighted.Further analysis also found both board size and leadership structure to significantly predict general and strategic information, financial information and social and board information categories of voluntary disclosure but not forward-looking information category.While the findings revealed that auditor type has significant positive relationships with voluntary disclosure categories of financial information and forward-looking information, its relationship with voluntary disclosure category of general and strategic information is negative.
In terms of policy recommendation, the SEC, GSE and other regulators should do more by enforcing adherence to good corporate governance practices.In addition, these regulators should appropriately be resourced by the central government to aid them to conduct their supervisory activities to ensure sound corporate governance practices in Ghanaian firms.Firms in their own capacity should improve their corporate governance practices as a way of enhancing the disclosure of vitally important financial and non-financial information to manage their risks for sustainable growth.
This study is characterized by some limitations.First, voluntary information disclosure of the firms was restricted to only those in annual reports and no other company media.Therefore, studies should be undertaken to extend voluntary disclosure by firms to cover other sources, e.g.internet websites and press releases.Finally, governance variables were solely collected from the annual reports, which sometimes failed to give further clarifications to those variables.For instance, it was difficult to prove the independence of non-executive directors in the annual reports.Future studies should consider to collect corporate governance information from multiple sources.

Corporate governance
disclosure score/index (extent of disclosure); VDMax = Maximum voluntary disclosure score possible; TVDScore = Total voluntary disclosure score for each company; d i = Disclosure item i; m = Actual number of relevant disclosure items (m # n); and n = Number of items expected to be disclosed.

Table 4 .
Table4presents the analysis of the variables of corporate governance and control variables of firmspecific characteristic with respect to the dependent variable, VDScore, using OLS regression with corresponding variance inflation factors.Significance is denoted at the ***0.01,**0.05 and *0.10 levels, respectively.The number of observations for the VDScore is 101 Notes: Table3shows the Spearman's rho correlation matrix.The sample consists of 22 firm-year observations for a five-year period.Italic text indicates statistical significance at the 5% level or better.See Table1for variable definitions

Table 5 .
Table5presents the analysis of the variables of corporate governance and control variables of firmspecific characteristics with respect to the dependent variables, Gen&StrgInf, FinData, FwdLkInfo and Soc&BdDisc.respectively, using OLS regression with corresponding variance inflation factors.Significance is denoted at the ***0.01,**0.05 and *0.10 levels, respectively.The number of observations (N) for all the categories of VDScore is 101