Exploring the quality of corporate governance disclosure under an “apply and explain” regime
ISSN: 1472-0701
Article publication date: 15 June 2023
Issue publication date: 3 November 2023
Abstract
Purpose
This study aims to explore the quality of corporate governance disclosure under an “apply and explain” regime in the context of an emerging economy (Mauritius), following a transition from the traditional “comply or explain” approach within the national code of corporate governance.
Design/methodology/approach
The research relies on a content analysis of corporate governance disclosure in 86 annual reports of companies listed on the Stock Exchange of Mauritius for the financial periods 2018–2019 and 2019–2020, one-way analysis of variance tests and draws on the typology of corporate governance explanations developed by Shrives and Brennan (2015), focusing on specificity, location and comprehensiveness dimensions. This paper draws on legitimacy theory and the concepts of substantive and symbolic disclosures to guide the interpretation of the findings.
Findings
From a specificity point of view, the disclosure index revealed significant variations, with the highest score being four times the lowest score. With regards to location and comprehensiveness, only around half of companies are making optimum use of a corporate governance report and providing explanations by principles. This paper also illustrated how some firms provided symbolic disclosures. Overall, there are disparities in the application of the code by companies, reflected in a blend of substantive and symbolic disclosures to maintain their legitimacy.
Originality/Implications
This study examines “apply and explain” disclosures in a emerging economy in contrast to the “comply or explain” approach studied so far in the literature. Merely professing a “well intended” shift to the “apply and explain” approach does not necessarily lead to improvements in the quality of corporate governance disclosures. Companies, governance professionals and regulatory bodies could formulate disclosure guidance to better underpin the implications of the “apply and explain” approach.
Keywords
Acknowledgements
Authors gratefully acknowledge the financial support offered by the Tertiary Education Commission (TEC) – project code T0708: “Accounting, Accountability and Reporting (ARR) reforms in Mauritius: Who (really) benefits from (all) this transparency?”
Citation
Gowry, Y., Soobaroyen, T. and Agathee, U.S. (2023), "Exploring the quality of corporate governance disclosure under an “apply and explain” regime", Corporate Governance, Vol. 23 No. 7, pp. 1690-1715. https://doi.org/10.1108/CG-07-2022-0297
Publisher
:Emerald Publishing Limited
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