Advanced

Between a Rock and a Hard Place : New Evidence on the Relationship between Ownership and Voluntary Disclosure

Jankensgård, Håkan LU (2017) In International Review of Financial Analysis
Abstract
Combining two Swedish databases with unique strengths I show empirically that stray firms, i.e. those lacking a controlling owner, have lower voluntary disclosure in financial reports (that is, information provided beyond what is formally required). This suggests managers prefer to withhold information to maximize their discretion over corporate policies. I also show that disclosure initially increases with block ownership, reflecting increased incentives to monitor and stronger governance. However, when block ownership exceeds a certain threshold level (>50%), disclosure starts to decrease, reflecting another conflict of interest, namely between minority and controlling owners. Evidence of this non-linear relationship is novel in the... (More)
Combining two Swedish databases with unique strengths I show empirically that stray firms, i.e. those lacking a controlling owner, have lower voluntary disclosure in financial reports (that is, information provided beyond what is formally required). This suggests managers prefer to withhold information to maximize their discretion over corporate policies. I also show that disclosure initially increases with block ownership, reflecting increased incentives to monitor and stronger governance. However, when block ownership exceeds a certain threshold level (>50%), disclosure starts to decrease, reflecting another conflict of interest, namely between minority and controlling owners. Evidence of this non-linear relationship is novel in the literature and may account for the mixed evidence in previous research. Moreover, I report findings on the impact of institutional, foreign, under-diversified, and controlling minority-owners, concluding that ownership structure has major implications for voluntary disclosure. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
voluntary disclosure, ownership, monitoring, agency costs, block ownership, G30, G32
in
International Review of Financial Analysis
pages
40 pages
publisher
North-Holland
external identifiers
  • scopus:85031129525
ISSN
1057-5219
DOI
10.1016/j.irfa.2017.09.009
language
English
LU publication?
yes
id
d046d28d-5fb3-480e-8966-f875c6ac48d2
date added to LUP
2017-10-06 16:26:50
date last changed
2018-01-07 12:21:08
@article{d046d28d-5fb3-480e-8966-f875c6ac48d2,
  abstract     = {Combining two Swedish databases with unique strengths I show empirically that stray firms, i.e. those lacking a controlling owner, have lower voluntary disclosure in financial reports (that is, information provided beyond what is formally required). This suggests managers prefer to withhold information to maximize their discretion over corporate policies. I also show that disclosure initially increases with block ownership, reflecting increased incentives to monitor and stronger governance. However, when block ownership exceeds a certain threshold level (>50%), disclosure starts to decrease, reflecting another conflict of interest, namely between minority and controlling owners. Evidence of this non-linear relationship is novel in the literature and may account for the mixed evidence in previous research. Moreover, I report findings on the impact of institutional, foreign, under-diversified, and controlling minority-owners, concluding that ownership structure has major implications for voluntary disclosure. },
  author       = {Jankensgård, Håkan},
  issn         = {1057-5219},
  keyword      = {voluntary disclosure,ownership,monitoring,agency costs,block ownership,G30,G32},
  language     = {eng},
  month        = {09},
  pages        = {40},
  publisher    = {North-Holland},
  series       = {International Review of Financial Analysis},
  title        = {Between a Rock and a Hard Place : New Evidence on the Relationship between Ownership and Voluntary Disclosure},
  url          = {http://dx.doi.org/10.1016/j.irfa.2017.09.009},
  year         = {2017},
}