Determinants of Corporate Disclosures: A Study on the Listed Manufacturing Companies in Bangladesh

Abstract

This research focuses on various issues; first to measure the level of mandatory and voluntary disclosures presented by the DSE-listed manufacturing companies in their annual reports, second to explore whether there is any interaction between the two types of disclosures and third to identify the factors (both in company’s internal and external setting)that are affecting the disclosure practice. This study proposes a contingency theory concept for analyzing the relationship between disclosures and the factors. Data have been collected from both qualitative and quantitative sources. By conducting content analysis of annual reports, the extents of mandatory and voluntary disclosures have been measured by two separate disclosure indices. The study reveals that companies are not complying fully with the mandatory requirements and also the level of voluntary disclosure is poor. The multiple regression analysis demonstrates a positive association between the two types of disclosures. It is observed that mandatory disclosures have significant positive relationship with size of companies (internal factor) and regulatory bodies (external factor); while it is negatively associated with profitability (internal factor) of companies and trade associations (external factor). Voluntary disclosures have positive association with size of companies (internal factor) and professional institutions (external factor).The present research would contribute to further the understanding of corporate reporting practice in emerging economy environment. In order to improve corporate transparency it is necessary to understand how various factors influence companies’ disclosure behavior. Thus evidences of this study have implications for regulators and professional accounting bodies for developing compliance with mandatory disclosure requirements and encouraging voluntary disclosure practices.