Information disclosure by family-controlled firms: The role of board independence and institutional ownership

Darmadi, S; Sodikin, A

Information disclosure by family-controlled firms: The role of board independence and institutional ownership

Darmadi, S

Sodikin, A

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Publisher:: Emerald
Publication Type:: Journal Article
Citation:: Asian Review of Accounting, 2013, 21, (3), pp. 223-240
Issue Date:: 2013-09-09

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Field	Value	Language
dc.contributor.author	Darmadi, S https://orcid.org/0000-0002-7705-2672
dc.contributor.author	Sodikin, A
dc.date.accessioned	2021-09-16T11:23:15Z
dc.date.available	2021-09-16T11:23:15Z
dc.date.issued	2013-09-09
dc.identifier.citation	Asian Review of Accounting, 2013, 21, (3), pp. 223-240
dc.identifier.issn	1321-7348
dc.identifier.issn	1758-8863
dc.identifier.uri	http://hdl.handle.net/10453/150604
dc.description.abstract	Purpose - The purpose of this paper is to investigate the influence of family control on the extent of voluntary disclosure in the annual report of Indonesian listed firms. Further, it seeks to investigate the role of corporate governance mechanisms in explaining the association between family control and voluntary disclosure. Governance mechanisms addressed here include board independence and institutional ownership. Design/methodology/approach - This study employs a sample comprising non-financial firms on the Indonesia stock exchange that published the 2010 annual report. The voluntary disclosure index is computed for each sample firm, based on content analysis of the annual report. Cross-sectional regressions are performed to test research hypotheses. Findings - Our evidence reveals that family control negatively and significantly influences the extent of information disclosure. This finding suggests that family-controlled firms have lower motivation to disclose additional voluntary information, which might unexpectedly expose private benefits maintained by the controlling family. We also find that the relationship between institutional ownership and disclosure is stronger in family firms. However, independent commissioners do not contribute to improving the extent of disclosure by family firms. Originality/value - The present study contributes to the rare existing literature addressing the relation of family control to information disclosure. Further, the role of corporate governance mechanisms in promoting greater information transparency in family-controlled firms is still very rarely examined. Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
dc.language	en
dc.publisher	Emerald
dc.relation.ispartof	Asian Review of Accounting
dc.relation.isbasedon	10.1108/ARA-01-2013-0009
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability
dc.title	Information disclosure by family-controlled firms: The role of board independence and institutional ownership
dc.type	Journal Article
utslib.citation.volume	21
utslib.for	1501 Accounting, Auditing and Accountability
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2021-09-16T11:23:14Z
pubs.issue	3
pubs.publication-status	Published
pubs.volume	21
utslib.citation.issue	3

Abstract:

Purpose - The purpose of this paper is to investigate the influence of family control on the extent of voluntary disclosure in the annual report of Indonesian listed firms. Further, it seeks to investigate the role of corporate governance mechanisms in explaining the association between family control and voluntary disclosure. Governance mechanisms addressed here include board independence and institutional ownership. Design/methodology/approach - This study employs a sample comprising non-financial firms on the Indonesia stock exchange that published the 2010 annual report. The voluntary disclosure index is computed for each sample firm, based on content analysis of the annual report. Cross-sectional regressions are performed to test research hypotheses. Findings - Our evidence reveals that family control negatively and significantly influences the extent of information disclosure. This finding suggests that family-controlled firms have lower motivation to disclose additional voluntary information, which might unexpectedly expose private benefits maintained by the controlling family. We also find that the relationship between institutional ownership and disclosure is stronger in family firms. However, independent commissioners do not contribute to improving the extent of disclosure by family firms. Originality/value - The present study contributes to the rare existing literature addressing the relation of family control to information disclosure. Further, the role of corporate governance mechanisms in promoting greater information transparency in family-controlled firms is still very rarely examined. Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.

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http://hdl.handle.net/10453/150604