Managerial Ownership, Corporate Governance and Voluntary Disclosure

Corporate governance involves various activities that can reduce agency costs. This study found that managerial ownership levels and other types of governance mechanisms in place affect the level and type of corporate discretionary disclosure. These factors, when combined, suggest a complex and interactive corporate governance structure. This study found, for firms with low levels of managerial ownership, a negative relationship between the level of managerial ownership and the level of discretionary disclosure. In addition, firms with a high percentage of outside directors are more likely to disclose board and management processes information, but no other type of discretionary information. Findings also indicate that firms in industries with frequent merger and acquisition activities and with managerial levels of 5% or higher are more likely to disclose ownership structure and investor relations information.