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A third dimension to understanding voluntary disclosures

A third dimension to understanding voluntary disclosures Purpose – The purpose of this paper is to establish sufficient potential for a novel perspective that could enhance understanding of the rationale behind voluntary disclosures. In this paper, the authors seek to provide an integrated view from different disciplines that points to a new dimension. This dimension is expected to promote a better understanding of voluntary disclosures in corporate governance. Design/methodology/approach – The authors use the conceptual underpinnings of agency theory and integrate several perspectives from different disciplines. Through the support of simple matrices and a conceptual figure, an interesting finding is proposed that could help provide a new way of looking at voluntary disclosures. Findings – The established view holds that due to information asymmetry between the shareholders and the management, voluntary disclosures are more meaningful for the shareholders of the firm. The authors, however, suggest that since information asymmetry is already embedded in several roles and strategic actions of the board, it leads to the development of a third dimension in understanding voluntary disclosures. Originality/value – Information asymmetry has been well understood as one of the key aspects of the agency theory. The authors' strive to apply this phenomenon while looking at the roles of the board and the strategic actions that result therein. The result is an enhanced understanding of the motivations behind voluntary disclosures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Strategy Emerald Publishing

A third dimension to understanding voluntary disclosures

John Ben Prince; Neeraj Dwivedi
Journal of Business Strategy , Volume 34 (4): 7 – Jul 12, 2013
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References (19)

Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0275-6668
DOI
10.1108/JBS-11-2012-0063
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to establish sufficient potential for a novel perspective that could enhance understanding of the rationale behind voluntary disclosures. In this paper, the authors seek to provide an integrated view from different disciplines that points to a new dimension. This dimension is expected to promote a better understanding of voluntary disclosures in corporate governance. Design/methodology/approach – The authors use the conceptual underpinnings of agency theory and integrate several perspectives from different disciplines. Through the support of simple matrices and a conceptual figure, an interesting finding is proposed that could help provide a new way of looking at voluntary disclosures. Findings – The established view holds that due to information asymmetry between the shareholders and the management, voluntary disclosures are more meaningful for the shareholders of the firm. The authors, however, suggest that since information asymmetry is already embedded in several roles and strategic actions of the board, it leads to the development of a third dimension in understanding voluntary disclosures. Originality/value – Information asymmetry has been well understood as one of the key aspects of the agency theory. The authors' strive to apply this phenomenon while looking at the roles of the board and the strategic actions that result therein. The result is an enhanced understanding of the motivations behind voluntary disclosures.

Journal

Journal of Business Strategy – Emerald Publishing

Published: Jul 12, 2013

Keywords: Disclosure, Corporate governance; Annual reports; Agency theory; Voluntary disclosures; Resource allocation; Boards of directors; Board roles; Information asymmetry; Top management; Stakeholders

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