Antecedents of Voluntary Corporate Governance Disclosure: A Post-2007/08 Financial Crisis Evidence from the Influential UK Combined Code

Purpose: This study investigates the level of compliance with, and disclosure of, good corporate governance (CG) practices among UK publicly listed firms, and consequently ascertains whether board characteristics and ownership structure variables can explain observable differences in the extent of voluntary CG compliance and disclosure practices.

Design/Methodology/Approach: The study uses one of the largest datasets to-date on compliance and disclosure of CG practices from 2008 to 2013 containing 120 CG provisions drawn from the 2010 UK Combined Code relating to 100 UK listed firms to conduct multiple regression analyses of the determinants of voluntary CG disclosures. A number of additional estimations, including two stage least squares, fixed-effects and lagged structures, are conducted in order to test the robustness of the findings.

Findings: The results suggest that there is a substantial variation in the levels of compliance with, and disclosure of, good CG practices among the sampled UK firms. We also find that firms with larger board size, more independent outside directors and greater director diversity tend to disclose more CG information voluntarily, whereas the level of voluntary CG compliance and disclosure is insignificantly related to the existence of a separate CG committee and institutional ownership. Additionally, the results indicate that block ownership and managerial ownership impact negatively on voluntary CG compliance and disclosure practices. The findings are fairly robust across a number of econometric models that sufficiently address various endogeneity problems and alternative CG indices. Overall, the findings are generally consistent with the predictions of neo-institutional theory.

Originality/Value: This paper extends, as well as contributes to the extant CG literature by offering new evidence on compliance with, and disclosure of, good CG recommendations contained in the 2010 UK Combined Code following the 2007/08 global financial crisis. This paper also advances the existing literature by offering new insights from a neo-institutional theoretical perspective of the impact of board and ownership mechanisms on voluntary CG compliance and disclosure practices.

Keywords: Corporate governance; Board and ownership mechanisms; Comply or explain; Neo-institutional theory; UK Combined Code