Corporate governance and voluntary disclosure practices in Czech Republic

Abstract

The decision to disclose enough information in annual reports is seen as an act of transparency. This study seeks to measure the extent of voluntary disclosure and to examine the relationship between corporate governance determinants and the level of voluntary disclosure. The study reports an average of 51.5% as the level of voluntary disclosure. Four corporate governance variables are used as the basis for the regression analysis. The evidence shows a positive association between the level of voluntary disclosure and the proportion of independent directors, block holder and the proportion of the audit committee with only the proportion of audit committee to the board showing statistical significance. The board size has a negative association. The category of corporate governance information items as part of the total voluntary checklist is largely disclosed among Czech firms. The study contributes to the literature on voluntary disclosure in a transition economy. The findings prove useful to investors and financial statement preparers as the knowledge informs them to question and request more information from the firms which are open to the capital market.