Ownership Structure, Board Attributes and the Level of Voluntary Disclosure in GCC Listed Firms

This thesis examines the impact of a number of ownership structures and board of directors’ attributes on the level of voluntary disclosure in the context of the Gulf Cooperation Council (GCC). The sample consists of 220 non-financial listed firms in seven GCC stock exchanges over a three-year period (2014-2016). The study utilizes a disclosure index in order to assess the level of voluntary disclosure. The results of the descriptive statistical analysis reveal a low voluntary disclosure, averaging at 12 per cent, provided by firms in the GCC. The disclosure in terms of various components of voluntary disclosure (e.g. strategic, financial and non-financial) also appears to be in the same range as total voluntary disclosure. In the country wide analysis, the UAE appears to be leading others with an average of around 20 per cent. The findings from the multivariate analysis show that family ownership is significantly associated with the overall voluntary disclosure and this finding seems driven by financial and non-financial components of voluntary disclosure. Institutional ownership is not associated with the overall voluntary disclosure score, however appears to be influencing the non-financial component disclosure. In similar vein, board members’ ownership and audit committee ownership are not significantly associated with the total voluntary disclosure however both these aspects are associated with the strategic and financial components of voluntary disclosure. Board ownership appears to positively impacting the financial component of disclosure and negatively influencing the strategic component of disclosure while audit committee ownership exerts a positive impact on the strategic component of disclosure and a negative one on the financial component of disclosure.
Furthermore, the study finds largely consistent evidence that board size and the number of board meetings during the year exert a negative impact on the level of voluntary disclosure suggesting that smaller boards are more effective in promoting transparency, and more meetings during the year could indicate difficulties facing the firms resulting in less disclosure. The study also finds that the holding of additional directorships by the board members exerts a positive impact on the voluntary disclosure level, highlighting that high experience is associated with members sitting in multiple boards; hence they are more effective in enhancing transparency. The study also records a positive and significant relationship between the size of the audit committee and voluntary disclosure. This result suggests that more members on the audit committee increase its effectiveness in monitoring the management and demanding more information. The results of this study also indicate that board independence is positively related to the strategic component of disclosure indicating that the independent members demand more strategic information since they are less involved in the firm compared to insider.
This study makes a major contribution to our understanding of the voluntary disclosure practice in the context of GCC firms and its association with a number of different corporate governance factors (ownership and board of directors). The findings of this study will have important policy implications as the GCC market regulators continue to improve the corporate governance environment and transparency level in order to attract more local and foreign investments.