Corporate Transparency and Disclosure Practices

Abstract

Today s business world is enormous and has a great impact on the society and on the whole nation. Activities of the corporates do hold an influence over the economical, social, cultural and technological environment of the nation. Thus, other than the investors and business people society and government are also keen to know about the financial as well non-financial activities of the corporates. Apart from this there has been a trend of scams in this corporate world. All such situations evolved the concept of transparency and disclosure at a very large scale, i.e. national as well as international. The presented research is focused on exploring the untouched area of this burning issue of transparency and disclosure practices. For this the study sample includes the Indian companies ranked in Global Fortune 500, which are BPCL, HPCL, RIL, ONGC, IOCL, Tata Steel and Tata Motors. The study has examined and compared the transparency and disclosure practices of these companies on the basis of information provided by them in the annual reports and on their websites. Significant influencing factors of TandD practices have also been identified by the researcher. For the achievement of these objectives various descriptive and inferential tools have been used in the study. The descriptive tools include mean, SD, Percentage, Skewness and Kurtosis and inferential tools include OLS, Coefficient of Determination, Shapiro-Wilk test, Jarque-Bera test, Levene s equality of variance test, and ANOVA test. A TandD index was developed on the basis of various voluntary and mandatory disclosure items categorized in different groups. Results indicated that there was no significant difference in the disclosure performance of the selected companies. On the other hand, it was found that on an average the TandD category Financial Information hold the highest disclosure score and the disclosure category Forward-looking Information had the lowest disclosure score. It was also found that disclosure of About Companies had the highest impact on the total disclosure index and CSR and Environment had the least impact on the total disclosure scores. The significant influencing factors of TandD practices found in the research are Sales, Multinational Affiliation, Liquidity and diffusion of ownership.