Disclosure by Indian companies following corporate governance reform

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    30 Citations (Scopus)

    Abstract

    Purpose – The purpose of this paper is to investigate Indian companies’ compliance with the mandatory
    and voluntary corporate governance disclosure requirements of the Stock Exchange Board of India’s
    Clause 49.
    Design/methodology/approach – The authors develop a corporate governance disclosure index
    and sub-indices based on Clause 49. Annual reports of listed Indian companies are scored according to
    their disclosures in two periods – pre and post amendments to Clause 49.
    Findings – Indian companies are highly compliant with corporate governance disclosure requirements
    of Clause 49. Disclosure increases significantly after amendments to Clause 49 as the penalties for
    non-compliance increase in severity. Government controlled firms disclose significantly less than
    privately owned firms.
    Research limitations/implications – The findings are consistent with bonding theory and the
    authors note that the presence of an independent regulator (with powers to take action against violators)
    provides corporate India with additional incentives to comply with corporate governance reform.
    Practical implications – These findings have important implications for policy makers and
    regulators as they contribute to the debate on the choice between formal corporate governance
    regulation versus informal self-regulation. The study also has implications for understanding factors
    associated with the adoption of disclosure practices in general.
    Originality/value – This is the first study to examine disclosure compliance in a major developing
    country pre and post amendments to mandatory corporate governance requirements. Prior evidence
    indicates a low level of disclosure in India but our results demonstrate an improvement in line with
    our theoretical predictions that suggests, India is converging towards an Anglo-Saxon model of
    corporate governance.
    Keywords India, Disclosure, Regulation, Corporate governance, Bonding theory,
    Stock exchange regulator
    Original languageEnglish
    Pages (from-to)114-137
    JournalJournal of Applied Accounting Research
    Volume16
    Issue number1
    DOIs
    Publication statusPublished - 2015

    Keywords

    • India, Disclosure, Regulation, Corporate governance, Bonding theory, Stock exchange regulator

    ASJC Scopus subject areas

    • Social Sciences(all)

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