Board monitoring and corporate disclosure: the role of the institutional environment and firm-level governance

Alexander Muravyev
Authors registered in the RePEc Author Service: Александр Муравьев

Journal of Accounting in Emerging Economies, 2024, vol. 15, issue 1, 138-175

Abstract: Purpose - This article aims to answer two research questions that remain controversial in the accounting and corporate governance literature: (1) how corporate disclosure is related to board monitoring and (2) how this link is affected by the institutional environment and firm-level governance. Design/methodology/approach - The study is based on S&P data on corporate disclosure by Russian companies collected over 2002–2010 and supplemented by information from the SKRIN database. The dataset covers 125 non-financial companies, with 559 observations in total. We use three indicators of board monitoring: the percentage of non-executive directors, a dummy for two-tier boards, and a dummy for an audit committee. The firm’s governance is proxied by a dummy for single class stock, while the institutional environment is proxied by a dummy for ADRs/GDRs. We apply conventional methods of panel data analysis with several robustness checks, including the random- and fixed-effects models, 2SLS that addresses the potential endogeneity of board composition, alternative definitions of the dependent variable, and an extended list of controls. Findings - We find a positive (complementary) relationship between the amount of disclosure and the proxies for board monitoring employed. This complementary relationship turns out to be the strongest among companies that have better internal governance but face a weaker institutional environment. There is little evidence of such complementarity under strong institutions. Practical implications - The findings may be of interest to investors and policymakers. As to the former, the results warn of firms that provide limited disclosure in the presence of strong corporate governance arrangements, such as independent boards, as these factors are not substitutes for each other. As to the latter, the results support comprehensive policies aimed at simultaneous improvements in both board governance and corporate disclosure in weak institutional settings. Originality/value - This paper uses a unique setting and rich, partly proprietary data to extend the existing literature on the relationship between corporate disclosure and board monitoring, with an emphasis on the moderating role of the institutional environment and firm-level governance. It is also one of the very few studies of corporate disclosure in Russia, an important emerging economy of the early 2000s.

Keywords: Corporate disclosure; Board monitoring; Internal governance; Institutional environment; Russia; G34; M41 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jaeepp:jaee-08-2023-0221

DOI: 10.1108/JAEE-08-2023-0221

Access Statistics for this article

Journal of Accounting in Emerging Economies is currently edited by Dr Shahzad Uddin

More articles in Journal of Accounting in Emerging Economies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().