The role of the board in voluntary disclosure

DOIhttps://doi.org/10.1108/CG-09-2017-0205
Date18 April 2018
Pages809-838
Published date18 April 2018
AuthorGiovana Bueno,Rosilene Marcon,Andre Leonardo Pruner-da-Silva,Fabio Ribeirete
Subject MatterCorporate governance,Strategy
The role of the board in voluntary
disclosure
Giovana Bueno, Rosilene Marcon, Andre Leonardo Pruner-da-Silva and Fabio Ribeirete
Abstract
Purpose Since 2012, the Brazilian Stock Exchange has recommended that listed companies inform
them if they have conducted voluntarydisclosure. The purpose of this study is to describe the voluntary
disclosure by companies listed in the B3 in Brazil and to analyze which characteristics of the board of
directorsinfluence this disclosure.
Design/methodology/approach The study involves quantitative research using a sample of 285
companies and 575 reports from 2011 to 2014. A fixed-effects regression model with panel data was
used for the analysis.
Findings The results were statisticallysignificant for gender and duality variables, which confirmsthe
theory that the presence of womenas members of the board positively influences voluntary disclosure
and that chief executiveofficer and chairman of the board positionshave a negative effect. The age and
independenceof the board variables did not present statisticalsignificance.
Research limitations/implications As a theoretical contribution, the authors aim to complement
sustainability, finance and strategy research by using agency theory and measuring the variable of
voluntarydisclosure and the board, which israrely studied in this context.
Practical implications As social and empirical contributions, a better understandingof this theme in
the context of emerging countries,which is the peculiarities of Brazil with little information transparency
and well-known corruptionscandals, is likely to aid investors. Increased access to companyinformation
can help investors better select their investment portfolios and assist in the choice of their board
representativesin companies in which they have participationand voting rights.
Originality/value The fact that Brazil is an emerging country, where the lack of transparency of
information and corruption in these environments stand out the importance of studying the subject of
voluntarydisclosure in this context. All data werecollected manually specifically forthis research.
Keywords Board of directors, Corporate governance, Voluntary disclosure
Paper type Research paper
Introduction
Scandals revealed throughout financial crises highlight the importance of ethical and
transparent actions and have motivated discussions on corporate governance, specifically
on boards (Martins and Rodrigues, 2005;Vieira and Mendes, 2006). Voluntarydisclosure is
important because it reducesinformation asymmetry (Cormier et al., 2010). Alignment of the
board with a business strategy focused on voluntary disclosure is an alternative to
strengthen credibility and promotes transparency and dialogue between parties (Adams,
2002;Boulouta, 2013), in addition to providing stakeholders indirect management
monitoring (Farooque and Ahulu,2015;Michelon and Parbonetti, 2012).
In 2012, the Brazilian Stock Exchange (B3), in partnership with the Global Reporting
Initiative (GRI), recommended that Brazilian listed companies indicate if they have
disclosed their sustainability reports and considered voluntary disclosure. The purpose of
the report is to provide information that will be useful to users in making economic
decisions. Existing and potential shareholders use the company’s annual reports to
Giovana Bueno is based at
Universidade do Vale do
Itajai, Itajai, Brazil.
Rosilene Marcon is Dra at
Universidade do Vale do
Itajai, Itajai, Brazil.
Andre Leonardo Pruner-da-
Silva is a PHD candidate at
Fundacao Getulio Vargas
Escola de Economia de
Sao Paulo, Sao Paulo,
Brazil.
Fabio Ribeirete is
Researcher at
Universidade do Vale do
Itajai, Itajai, Brazil.
Received 1 September 2017
Revised 17 January 2018
20 March 2018
Accepted 21 March 2018
PAGE 886 jCORPORATE GOVERNANCE jVOL. 18 NO. 5 2018,pp. 886-910, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-09-2017-0205
evaluate the investment potential of a company’s stock, and creditors use them to assess
the company’s credit and liquidity capacity (Agyei-Mensah, 2016). The objective of this
paper is to describe the disclosure reports of Brazilian companies listed on the B3 from
2011 to 2014 and determine which characteristics of the board of directors influence
voluntary disclosure.
As an emerging country, Brazil is embeddedin a challenging environment (Cuervo-Cazurra
and Genc, 2008) characterized by a lack of access to reliable and adequate information for
stakeholders, economically healthy regulations and efficient judicial systems (Rottig, 2016).
The lack of information transparency and the corruption in these environments underscore
the importance of studying the subject of voluntary disclosure within this context because
published corporate information can be used by organizations to mitigate agency costs,
political costs and information asymmetry (Friaz-Aceituno et al.,2013;Hapsoro and
Fadhilla, 2017;Santana et al., 2015). In Latin America, Brazil accounts for over 50 per cent
of all reports and plays an important role in the dissemination process (Calixto, 2013;
Conceic¸a
˜oet al.,2012). The average social-environmental disclosure index of Brazilian
companies was 65 per cent in 2012 (Santanaet al., 2015).
Disclosure and corporate governance are explained by several theories, notably, the
agency theory, the legitimacy theory, the signaling theory, the stakeholder theory and the
voluntary disclosure theory (Macedo et al.,2013). This research is based on the agency
theory because it comprises two main themes: information asymmetry (voluntary disclosure
increases transparency between the parties) and governance mechanisms (the board
monitors and controls the actions of the partiesto reduce this asymmetry).
Regarding the relationship between characteristics of the board and voluntary disclosure,
Michelon and Parbonetti (2012) did not find significant results for the independence and
duality variables. However, Matos and Gois (2013),Agyei-Mensah (2016),Madhani (2015)
and Hapsoro and Fadhilla (2017)found that the proportion of independent directors was the
most relevant variable. In the Brazilian context, research has investigated the predominant
factors for dissemination of sustainability reports, including studies by Cunha and Ribeiro
(2008) and Murcia et al. (2008) that related the disclosure to other characteristics of the
company and governance but not the board of directorsspecifically.
Post et al. (2011-2011) and Hafsi and Turgut (2013) surveyed American companies and
suggested research in other countries and with larger samples. Thus, it would be opportune to
study an emerging country such as Brazil so that the investigations can be compared. Michelon
and Parbonetti (2012) recommended analyzing other variables in addition to independent
members and duality and analyzing longer periods of time. In addition, the authors used a
dichotomous measure for the disclosure index that did not allow for them to make any
statements about the extent of disclosure. As suggested in this study, other board variables
such as the age and proportion of women were used to verify the relationship with disclosure.
As a theoretical contribution, we aim to complement sustainability, finance and strategy
research by:
nusing the agency theory to explain the conflicts arising from the lack of transparency
between parties, which generates the information asymmetry;
nmeasuring the variable of voluntary disclosure and its interaction with other
characteristics of the board, which is little studied in this context; this measurement can
be used in other studies and will facilitate comparison between new studies in different
contexts and periods; and
nin the Brazilian context, in which the peculiarities of Brazil as an emerging country with
little information transparency, weak institutions and well-known corruption scandals in
companies and government highlights the relevance of analysis of characteristics of
companies that adhere to the voluntary disclosure.
VOL. 18 NO. 5 2018 jCORPORATE GOVERNANCE jPAGE 887

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT