Board Structure And Voluntary Disclosure Of Listed Industrial Goods Companies In Nigeria

The paper assesses the board structure and voluntary disclosure of listed industrial goods companies in Nigeria. A total of 134 respondents were selected from the population figure out of which the sample size was determined. The primary source of data collected was mainly the use of a structured questionnaire which was designed to elicit information on board structure, voluntary disclosure, and quick ratio of quoted manufacturing companies. The secondary sources of data were analyzed using frequency table, percentage and mean score analysis while the nonparametric statistical test (Chi-square) was used to test the formulated hypothesis using SPSS (statistical package for social sciences). Based on the study"s findings, it concludes that the size of the firm influences the extent of voluntary disclosure in the Nigerian listed Industrial Goods companies. Firm size, leverage and profitability as a measure of performance have significant impact on voluntary disclosure. The study recommends that users of accounting information should be mindful of the negative effects of firm size, which portrays the denials of responsibility, such as societal obligation and expectations, tax liability and agency costs implications associated with organisational size.

Introduction

1.1 Background of the Study

Annual reports are the primary medium various stakeholders rely on for making decisions. Thus management, responsible for preparing the annual reports, is accountable to all the stakeholders. As a result, they should disclose all relevant information in the annual reports for stakeholders to make efficient economic decisions. In addition, increased disclosures of information, apart from the ones required by the standards and the regulators are important. These additional disclosures protect the interest of minority shareholders and ensure transparency of company"s information to its interested parties. Meek, Roberts and Gray (1995), define voluntary corporate disclosure as disclosures in excess of requirements in annual reports and other media as deemed relevant by the company management for an effective decision-making by the users of the financial reports. However, agency theory assumes a separation of ownership from control would lead to agency problems, as the agents will not always maximize the shareholder value. And hence, the incentive for the management to provide additional disclosures decreases. Moreover, the controlling shareholders in a company mostly maximize their self-interest rather than that of the minority shareholders. Thus, there is increased emphasis on the need to ensure the protection of the interests of minority shareholders. Minority shareholders are entitled to receive all relevant information to make an informed judgment on the performance of the company. Disclosure of less voluntary information to the minority shareholders is one way controlling shareholders expropriate minority shareholders. Most of the disclosure studies examining the association between ownership structure and voluntary disclosure were conducted elsewhere around the world (such as Eng & Mak 2003, Ghazali & Weetman 2006, El-Gazzar 1998, and Barako, Hancock & Izan 2006). However, the impact of ownership structure on corporate voluntary disclosure practices, remains unexplored in emerging stock markets especially Nigeria. The main objective of this study is to examine the impact of ownership structure on voluntary disclosure in the Nigerian listed industrial goods companies

1.2 Statement of the Problem

Voluntary disclosure information is very pertinent to stakeholders of an organization but it has been noted that quite a number of companies do not engage in voluntary disclosure of information must companies comply with the mandatory disclosure requirements and end it there this should not actually be the case. It is has therefore become of" utmost importance to trace the root cause of lack of voluntary disclosure in companies and determine what exact responsible for their lagging behind. Could it be as a result of mere ignorance or the fact that they have something to hide or simply because the performance achieved is not commensurate with the expectations of stakeholders. Corporate disclosure of financial information became an important issue in Nigeria following the financial crisis of 2008.

1.3 Objective of the Study

The broad objective of this study is to assess board structure and the voluntary disclosure of listed industrial goods: companies in Nigeria.

Determine the effect of voluntary disclosure on current ratio of quoted manufacturing companies.

Ascertain the effect of voluntary disclosure on quick ratio of quoted manufacturing companies.

1.4 Research Hypotheses

Ho1: Firm size, leverage and profitability have no significant impact on voluntary disclosure in the Nigerian listed industrial goods companies.

Ho2: Firm size, leverage and profitability have significant impact on voluntary disclosure in the Nigerian listed industrial goods companies.

1.5 Significance of the Study

The study findings will be of importance to information users, including investors, researchers, creditors, financial analysts, debtors, government and security consultants because they provide them with information that is useful when making investment and regulatory decisions.

1.6 Scope / Limitations of the Study

This study is on board structure and the voluntary disclosure of listed industrial goods: companies in Nigeria.

Limitations of the study

Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire, and interview).

Time Constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted to the research work.

1.7 Structure / Organisation of the Study

The paper is organized as follows: Section 1 is an introduction; section 2 presents a literature review on the firm characteristics and voluntary disclosure. Section 3 is the Research methodology. Section 4 presents research results and discussion and, finally, conclusions and recommendations are presented in section 5.

Conclusion and Recommendations

5.1 Conclusion

The paper assessed the board structure and voluntary disclosure of listed industrial goods companies in Nigeria. Based on the study"s findings, it concludes that the size of the firm influences the extent of voluntary disclosure in the Nigerian listed industrial goods companies. Larger corporations are more likely to disclose more information than smaller corporations, since it is more probable that smaller corporations feel it will give the corporation competitive disadvantage, when disclosing full information in the annual report. Also, leverage influences the extent of the voluntary disclosure of information in the Nigerian listed industrial goods companies. And, finally, profitability as a measure of performance is one of the most common determinants of voluntary disclosure in the Nigerian industrial goods companies. Companies with high profits disclose more information voluntarily in their annual reports then those with low profits.

5.2 Recommendations

Thus, the study recommends that the users of accounting information should be mindful of the negative effects of firm size on the extent of voluntary disclosure, which portrays the denials of responsibility, such as societal obligation and expectations, tax liability and agency costs implications associated with organisational size. Also, to reduce monitoring cost and agency problems, highly geared companies should increase the extent of their disclosure of information. And, finally, users of accounting information should be mindful of the negative effects of profit on the extent of voluntary disclosure, as that is a sign of bad news and loss of reputation, which may affect company share valuation and competitive advantage.

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