What determines the informativeness of firms' explanations for deviations from the Dutch corporate governance code?

Reggy Hooghiemstra

Accounting and Business Research, 2012, vol. 42, issue 1, 1-27

Abstract: The comply-or-explain principle is a common feature of corporate governance codes. While prior studies investigated compliance with corporate governance codes as well as the effects of compliance on firm behaviour and performance, explanations for deviations from a corporate governance code remain largely unexamined. This paper intends to fill that gap. The paper draws on the voluntary disclosure literature and agency theory to examine the association between firm characteristics and the informativeness of explanations for deviations from the Dutch corporate governance code. Applying content analysis to corporate governance statements for a sample of Dutch listed firms for the period 2005--2009, the study finds that ownership concentration and number of analysts following the firm are positively associated with informativeness. Furthermore, there is indicative evidence that board strength and informativeness are positively associated. The study also finds a negative association between leverage and informativeness. Institutional investors, however, do not seem to affect this type of disclosure. Taken together, the findings suggest that certain firm characteristics are associated with a firm's choice to provide either generic and uninformative explanations or more firm-specific and informative explanations. On the basis of the study's findings, I argue that firms having weaker boards, firms followed by fewer analysts, firms having more dispersed ownership and firms relying more on debt finance tend to approach comply-or-explain more symbolically than substantively.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://hdl.handle.net/10.1080/00014788.2011.600630 (text/html)
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:taf:acctbr:v:42:y:2012:i:1:p:1-27

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RABR20

DOI: 10.1080/00014788.2011.600630

Access Statistics for this article

Accounting and Business Research is currently edited by Vivien Beattie

More articles in Accounting and Business Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().