Literature Review About Corporate Governance And Voluntary Disclosure Finance Essay
Although corporate governance has been the subject of extensive searches in developed countries, has been carried out limited research to analyze the issue of corporate governance in the business environment in developing countries. Moreover, these studies question whether the research approach is limited to describe the state of corporate governance from official bodies or point of view of what should be the practical application of principles
In 2006 SACMA intensifies its efforts to provide fairness in the trading of the Saudi stocks. Among these efforts was the issuance of the draft of corporate governance for listed companies in 2006. The draft provides recommendations of the criteria for the best corporate governance practice that should listed companies counsel. It has covered to some extent the main five principles issued by the Organization for Economic Co-operation and Development (OECD): the rights of shareholders, the equitable treatment of shareholders, the role of stakeholders in corporate governance, disclosure and transparency, the responsibility of the board of directors.
Al-Motairy (2003) explores the state of corporate governance practices in Saudi Arabia. He concludes that there is a vital need for (1) a review of these regulations to reflect the current practices of corporate governance, (2) the issuance of guidance for best practices for management and financial affair in corporations and (3) the establishment of an organisation to accelerate the adoption of best practices of corporate governance.
Similarly, Fouzy (2003) evaluates the practices of corporate governance’s principles in Egypt. He recognises the development in Egyptian official regulations toward the application of best practices of corporate governance. He then argues that these developments are not met enough by Egyptian companies in their practical applications.
Another example is the study which was carried out by Oyelere and Mohammed (2005) investigating the practices of corporate governance in Oman and how it is being communicated to stakeholders. They recommend enhanced regulation and communication for the Omani stock market to keep pace with the international developments.
Finally, a research paper by the Centre for International Private Enterprise (CIPE, 2003) examines the corporate governance practice in four Middle Eastern countries (Egypt, Jordan, Morocco, and Lebanon). It finds that corporate governance practice is approached differently by each country. This is depended on the sophistication of the financial market in each country. The research paper further provides several recommendations to improve the application of the principles of corporate governance in the region as a whole.
In conclusion, research that investigated the issue of corporate governance stresses the importance of better regulation of corporate governance in the region to increase public confidence in the financial markets.
A major problem is the unequal and Information Agency, which agents to possess and use information for personal care, you may not have the developer. This occurs because it is presumed that the owner can not control the behavior clearly to the operator (Beaver 1998, Scott 1997). An example of this situation, where a team of managers may have inside information about the future of a stable and positive work and decisions that will be primarily on the potential utility of the capital account. Meek and others. Adopted (1995, p.555) voluntary disclosure of "disclosure requirements mentioned above - are the options available for free from the company to provide management accounting and other information that is relevant to the decision needs of users in their annual reports. Over the past decade, there was a group growing body of literature focuses on the preparation of voluntary financial reporting as a tool to alleviate the problem of agency.
Therefore, as suggested by the theory of the principles of agency, corporate governance may be one of the monitoring mechanisms.
The study of Kamal, Al-Hussaini, Al-Kwari and Nuseibeh (2006) examined to test the validity of theories employed in the literature to explain variation in the extent of corporate voluntary disclosure within the corporate social disclosure context under Qatari companies. The findings indicate that variations in corporate social disclosure by the sampled Qatari companies are associated with the firm size, business risk and corporate growth.
Hossain and Reaz's (2007) study reported the results of an empirical investigation of the extent of voluntary disclosure by 38 listed banking companies in India. It also reports the results of the association between company-specific characteristics and voluntary disclosure of the sample companies. The study revealed that Indian banks are disclosing a considerable amount of voluntary information. The findings also indicated that size and assets-in-place are significant and other variables such as age, diversification, board composition, multiple exchange listing and complexity of business are insignificant in explaining the level of disclosure.
Haniffa and Cooke (2002) examined the relationships between a number of corporate governance, cultural, and firm-specific characteristics, and the extent of voluntary disclosure in the annual reports of a sample of Malaysian companies. A total of 65 items were selected and an unweighted disclosure index was used in the study. The findings indicated a significant association between corporate governance and the extent of voluntary disclosure. In addition, one cultural factor (proportion of Malay directors on the board), was found to be significantly associated with the extent of voluntary disclosure.
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