THE EFFECT OF VOLUNTARY DISCLOSED INFORMATION ON CORPORATE FINANCIAL PERFORMANCE: MODERATING ROLE OF CORPORATE GOVERNANCE

Abstract

This study inspects the influence of voluntary disclosures on enterprise’s fiscal performance by employing corporate governance as a moderator. For this purpose, this study obtains the 12 years secondary data from listed non-financial enterprises from 2008 to 2019. This study employs the 69-items index of corporate voluntary disclosures to quantify the voluntary disclosed information in sampled enterprises. The present study utilizes the combined corporate governance variable by employing the principal component analysis on eleven internal and external components. Likewise, this study uses the composite variable of the enterprise’s financial performance by employing the principal component analysis on four financial ratios. By applying the fixed effect models, the present study finds the negative influence of corporate voluntary disclosures on enterprise’s fiscal performance. Furthermore, this study finds that corporate governance significantly weakens the association of company’s voluntary disclosures with the enterprise’s financial performance as a moderating variable. Therefore, this study recommends improving the governance system of non-financial listed firms, which leads to weaken the negative effect of voluntary disclosures on enterprises’ performance and consequently, also improves the enterprises’ fiscal performance.