Firm size and the voluntary disclosure of nonfinancial information by private versus public firm managers

Khondkar E. Karim (Manning School of Business, University of Massachusetts Lowell, Lowell, Massachusetts, USA)
Robert Pinsker (College of Business, Florida Atlantic University, Boca Raton, Florida, USA)
Ashok Robin (Saunders College of Business, Rochester Institute of Technology, Rochester, New York, USA)

Managerial Auditing Journal

ISSN: 0268-6902

Publication date: 7 October 2013



The specific purpose of this study is to understand how firm size and public/private affiliation (employment status) affect voluntary disclosure decisions concerning quantitatively immaterial nonfinancial information. Although the prior disclosure literature is large and has considered a variety of factors including size and to a lesser degree employment status, this study offers a new perspective by considering both factors in the context of qualitative materiality.


This paper presents 136 manager participants with 24 cues representing nonfinancial, realistic business events and solicits their disclosure judgments. The cues are adapted from Pinsker et al. and contain information that does not meet widely-accepted quantitative thresholds for disclosure (e.g. 5 percent of net income), yet were identified by the Securities and Exchange Commission (SEC) as more likely to be material. This paper uses a median split of total assets and total revenues to determine “large” and “small” firms. Managers' judgments are measured in an own-firm setting (The context is their current employer, which can be public or private.).


This paper finds that disclosure is positively linked to firm size, but this paper do not find an employer status effect. Additional testing reveals that private firm managers are sensitive to SEC oversight and other external, competitive pressures, suggesting that they face mimetic pressures to behave like their public firm counterparts. In sum, their findings contribute significantly to the disclosure, strategic management, institutional theory and judgment-and-decision-making (JDM) literatures.


Although there is a vast literature on public firm managers' voluntary disclosure behavior (mostly involving large firms), there is little research regarding the voluntary disclosure behavior of small or large private firm managers involving nonfinancial information.



E. Karim, K., Pinsker, R. and Robin, A. (2013), "Firm size and the voluntary disclosure of nonfinancial information by private versus public firm managers", Managerial Auditing Journal, Vol. 28 No. 9, pp. 866-892.

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