Voluntary Corporate Disclosures By Indian Companies

Abstract

The quality of corporate disclosure, influences to a great extent, the quality of investment decisions made by the investors. With improved corporate disclosure practices, the investors' interest is protected against securities fraud, and their confidence in the securities market is developed and maintained (Singhvi, 1967; Meek, Roberts & Gray, 1975). This in tum eases the problem of raising long-term capital funds through the securities market (Lal, 2005; Beaver, 1981 ). In the long run, adequate disclosure is expected to enhance the market price of a company's share in the investment market, which in tum will have a favourable impact on the company's cost of capital (Lal, 1985; Foster, 2002). The fact that companies are raising capital outside India through ADRs/GDRs further strengthens the need for improving the quality of corporate disclosure on a continuous basis (Narayanaswamy, 2006). The present study analyses the quality of voluntary reporting by Indian companies in their annual reports. It explores the relationship between corporate disclosure and certain select corporate attributes.