Corporate governance and the quality of voluntary disclosure: Evidence from medium-sized listed firms

In turbulent economic conditions, firms have to improve their corporate communication in order to meet the information requirements of capital markets. The topic of the quality of communication in medium-sized companies appears to have received comparatively limited attention, despite their growing economic importance. This article, applying content analysis techniques, addresses the nature of voluntary disclosure in medium-sized listed firms and focuses on the quality of corporate communication. This study, through the use of 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 quality. The results show that a diffuse ownership along with the existence of an audit committee is associated with increased qualitative levels of voluntary disclosure, while managerial ownership, board size and the number of board committees present a negative relation to disclosure. Moreover, institutional investors’ ownership and the presence of independent directors are not related to disclosure quality.