Corporate Governance and Quality of Voluntary Disclosure: Evidence from Listed Medium-sized Firms

In turbulent economic conditions, firms have to improve corporate communication for meeting the informative requirements of capital markets. Empirical studies investigating the quality of voluntary disclosure are basically focused on major firms. Conversely, the theme concerning the quality of communication in medium-sized companies appears rather unexplored, despite their growing economic relevance. This paper, applying content analysis techniques, addresses the nature of voluntary disclosure in listed medium-sized firms and focuses on the quality of corporate communication. Listed firms, in fact, due to their high visibility and on-going growth, are called to reinforce stakeholders’ trust and to attract new financial resources, by improving voluntary disclosure. The study, performing a linear regression model, examines, in particular, the explanatory power of corporate governance issues, such as ownership structure and board composition, as potential determinants of communication’s quality. The results show that a diffuse ownership and the existence of an audit committee are associated with increasing quality of voluntary disclosure, while managerial ownership, board’s size and the number of board’s committees present a negative relation to disclosure. Moreover, institutional investors’ ownership and independent directors are not related to disclosure’s quality.