Corporate governance quality and non-financial KPI disclosure comparability: UK evidence

Laura Bini (), Francesco Giunta (), Rebecca Miccini () and Lorenzo Simoni ()
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Laura Bini: University of Florence
Francesco Giunta: University of Florence
Rebecca Miccini: University of Florence
Lorenzo Simoni: University of Genoa

Journal of Management & Governance, 2023, vol. 27, issue 1, No 2, 43-74

Abstract: Abstract This study examines the quality of non-financial disclosure in Strategic Reports, focusing on non-financial key performance indicators (NFKPIs). A vital issue for NFKPI disclosure quality deals with overtime comparability. As NFKPI disclosure is mainly based on managers’ discretional choices regarding which indicators to disclose and how, we argue that corporate governance could play a key role in affecting disclosure practices. The analysis of a sample of UK listed companies from different industries reveals that most companies consistently report NFKPIs and that disclosure practices are influenced by the quality of the board of directors. Additional analyses indicate that among board characteristics, experience in financial key roles is the most effective. Further, intangible intensity is found to be positively associated with NFKPI consistency. Finally, more leveraged and less profitable firms seem to pay more attention to disclosure consistency, supporting the argument that they are subject to more severe scrutiny. This study is the first to examine the relationship between governance quality and NFKPI consistency. It enlarges previous evidence on the relation between corporate governance and disclosure by supporting the role of the board of directors in monitoring non-financial reporting.

Keywords: Non-financial information; Key performance indicators; Comparability; Corporate governance; Disclosure quality; Consistency (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10997-021-09608-3

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