The relative value relevance of shareholder versus stakeholder corporate governance disclosure policy reforms in South Africa


Ntim, Collins G., Opong, Kwaku K. and Danbolt, Jo (2012) The relative value relevance of shareholder versus stakeholder corporate governance disclosure policy reforms in South Africa. Corporate Governance: An International Review, 20, (1), 84-105. (doi:10.1111/j.1467-8683.2011.00891.x).

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Description/Abstract

Research Question/Issue: South Africa (SA) has pursued distinctive corporate governance (CG) disclosure policy reforms in the form of the King Reports, which require firms to disclose a set of recommended good CG practices on both shareholders and stakeholders. This paper investigates the effect of the new shareholder and stakeholder CG disclosure rules on firm value, as well as the relative value relevance of disclosing good CG practices on shareholders versus stakeholders.

Research Findings/Insights: Using a sample of 169 SA listed firms from 2002 to 2007, we find that disclosing good CG practices on both shareholders and stakeholders impacts positively on firm value, with the latter evidence providing new explicit support for the resource dependence theory. However, we provide additional new evidence, which suggests that disclosing shareholder CG practices contributes significantly more to firm value than stakeholder ones. Our results are robust to controlling for different types of endogeneities.

Theoretical/Academic Implications: The paper generally contributes to the literature on the association between disclosure of CG practices and firm value by specifically modeling the relationship within a unique institutional and CG environment. Specifically, we make two new contributions to the extant literature. First, we show how stakeholder CG disclosure practices impact on firm value. Second, we provide evidence on the relative value relevance of disclosing shareholder and stakeholder CG practices.

Practical/Policy Implications: Our results have important policy and regulatory implications, especially for authorities in other developing countries facing socio-economic problems that are currently contemplating or pursuing CG disclosure policy reforms. Since our evidence indicates that additional value can be created for firms that provide more transparent information on stakeholder CG practices, it provides authorities in other emerging countries currently planning or pursing CG reforms with a strong motivation to formally extend CG disclosure rules to cover both shareholder and stakeholder provisions.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1111/j.1467-8683.2011.00891.x
ISSNs: 1467-8683 (electronic)
0964-8410 (print)
Related URLs:
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions : Faculty of Business and Law > Southampton Business School > Centre of Excellence for International Banking, Finance & Accounting
ePrint ID: 342995
Accepted Date and Publication Date:
Status
1 January 2012Published
Date Deposited: 20 Sep 2012 09:22
Last Modified: 30 Sep 2016 17:59
URI: http://eprints.soton.ac.uk/id/eprint/342995

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