A Study Of The Relationship Between Corporate Governance Structures And The Extent Of Voluntary Disclosure

Journal of International Accounting,
Auditing & Taxation 10 (2001) 139 –156

A study of the relationship between corporate governance structures and the extent of voluntary disclosure
Simon S.M. Ho*, Kar Shun Wong
School of Accountancy, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong

Abstract
The primary objective of this study is to test a theoretical framework relating four major corporate governance attributes with the extent of voluntary disclosure provided by listed firms in Hong Kong.
These corporate governance attributes are the proportion of independent directors to total number of directors on the board, the existence of a voluntary audit committee, the existence of dominant personalities (CEO/Chairman duality), and the percentage of family members on the board. Using a weighted relative disclosure index for measuring voluntary disclosure, the results indicate that the existence of an audit committee is significantly and positively related to the extent of voluntary disclosure, while the percentage of family members on the board is negatively related to the extent of voluntary disclosure. The study provides empirical evidence to policy makers and regulators in East
Asia for implementing the two new board governance requirements on audit committee and family control. © 2001 Elsevier Science Inc. All rights reserved.
Keywords: Corporate disclosure; Corporate governance; Voluntary disclosure; Hong Kong

1. Introduction
It is commonly agreed that the recent Asian financial crisis was not only the result of a loss in investor confidence but, more importantly, of a lack of effective corporate governance and transparency in many of Asia’s financial markets and individual firms1. Over the last several years, most East Asian economies have been actively reviewing and improving their regulatory frameworks, in particular, corporate governance, transparency and disclosure.

* Corresponding author. Fax: ϩ(852) 2603-6604.
E-mail address: simon

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