Exploring the relation between corporate reporting and corporate governance effectiveness

Abstract

Purpose

The purpose of this paper is to investigate the relationship between corporate governance effectiveness and information transparency. Hence, this paper seeks to extend prior information transparency research.

Design/methodology/approach

This study uses a sample of 28 non-financial listed Tunisian companies and covers an eight-year period from 2006 to 2013. To test the hypotheses of this research, a simultaneous equation system model was applied.

Findings

The results obtained show that, for the Tunisians companies, corporate governance practices have a significant positive effect on information transparency. The current study also provides evidence that pertinent information can improve corporate governance index.

Research limitations/implications

The findings may be of interest to the academic researchers, practitioners and regulators who are interested in discovering the quality of corporate governance practices in Tunisian context.

Practical implications

The findings of this study can help Tunisian regulators in creating corporate governance disclosure requirements. The findings also provide the African business community insights concerning the quality of corporate governance and of corporate reporting.

Social implications

This research helps also to inform regulators about the benefits of disclosure more information to investors and to the firm. For instance, how the information can be a source of transparency and stability in the firms what and favors the social environment of the firms.

Originality/value

This paper extends the existing literature by examining the causal relationship between corporate governance and information transparency.

Citation

Kachouri, M. and Jarboui, A. (2017), "Exploring the relation between corporate reporting and corporate governance effectiveness", Journal of Financial Reporting and Accounting, Vol. 15 No. 3, pp. 347-366. https://doi.org/10.1108/JFRA-06-2016-0053