Impact of board independence on the quality of community disclosures in annual reports. Issue 4 (December 2015)

• Record Type: Journal Article
• Authors: Yekini, Kemi C.; Adelopo, Ismail; Andrikopoulos, Panagiotis; Yekini, Sina
• Is Part Of: Accounting forum. Volume 39:Issue 4(2015)
• Page Start: 249
• Page End: 267
• Publication Date: 2015-12
• Subjects: Corporate governance -- Non-executive directors -- Board composition -- Disclosure quality -- Community disclosures -- Stakeholders theory -- Panel study; Accounting -- Australia -- Periodicals; Comptabilité -- Australie -- Périodiques; Finances de l'entreprise; Australie; 657.05
• DOI: 10.1016/j.accfor.2015.05.004
• Languages: English
• ISSNs: 0155-9982

Abstract

Highlights: The study utilizes panel study approach. Our results suggest that board independence is crucial for quality disclosures. It offers insight to policy makers and provides guidance on optimal board composition. It provides guidance on the interaction of the firm with its corporate and extended environment. Abstract: This study investigates the link between board independence and the quality of community disclosures in annual reports. Using content analysis and a panel dataset from UK FTSE 350 companies the results indicate a statistically significant relationship between board independence, as measured by the proportion of nonexecutive directors, and the quality of community disclosures, while holding constant other corporate governance and firm specific variables. The study indicates that companies with more non-executive directors are likely to disclose higher quality information on their community activities than others. This finding offers important insights to policy makers who are interested in achieving optimal board composition and furthers our understanding of the firm's interaction with its corporate and extended environment through high-quality disclosures. The originality of this paper lies in the fact that it is the first to specifically examine the relationship between outside directors and community disclosures in annual reports. The paper contributes both to the corporate governance and community disclosure literature.