The influence of ownership structures and board practices on corporate social disclosures in Bangladesh

Abstract

Purpose – This study examines the influences of ownership concentration and the imposition of regulation on corporate governance (especially appointments of independent outside directors into the board) on voluntary corporate social disclosures (CSD) practices in Bangladesh. Design/methodology/approach – CSD indices are developed using content analysis in terms of different attributes reported in the sample companies’ annual reports. Consistent with earlier studies, a checklist of items is constructed to assess the extent of CSD in annual reports. A two-stage least square (2SLS) regression analysis is used to examine the extent of the influences on CSD practices due to differing ownership structures and changed board compositions upon a notification of good corporate governance principles by the regulatory body in Bangladesh. To compare the differences on CSD practices before and after the imposition of regulation two periods (pre-notification from 2004 to 2005 and post-notification from 2006 to 2007) are considered for the analysis. Findings – The results show that although ownership structures have small influence on CSD practices, but the imposition of regulation on good corporate governance can significantly influence such practices. Practical implications – This suggests that without regulation (imposed or otherwise) companies have no incentives to provide voluntary social disclosures in annual reports in a developing country context. Original/value of paper – This study contributes to the literature on the practices of CSD in the context of developing countries. As well, this study supports the theory of pro-regulation on corporate governance.