Ownership and Disclosure
A Review of Literature
By
BADRU Bazeet and Mousa Sharaf Adin Hezam
Abstract
This is a review of various literatures on ownership and disclosure which has been carried out by various researchers in different countries. So far majorities of the researchers shows that the extent of corporate disclosure is negatively associated with a higher management of ownership structure and the extent of corporate voluntary disclosures is positively related with a higher institutional ownership structure. But findings also show that the negative relationship is weaker if the firm has a higher proportion of independent non- executive directors.
Introduction
Ownership Structure is a mechanism that aligns the interest of Shareholders and Managers. Corporate governace is the capstone of the activities that can reduce agency costs. Corporate mangers disclosure policies are influenced by firm’s ownership and governance on the level of various types of information disclosure. This is a summary of literature review on ownership structure and corporate disclosure. Studies have shown that ownership structure can be state, legal, managerial and block holder depending on the countries and cultural environment.
Blockholder ownership is the percentage of shares held by substancial shareholders( that is shareholdings of 5% or more). Jensen and Meckling (1976) argue that substancial shareholders are expected to have both greater power and incentives to monitor management, as their wealth is tied to the form’s financial performance.
Managerial ownership is the proportion of ordinary shares held by senior managers, including directors and supervisors. The extent of managers shareholdings can reduce agency costs as it serves to align the interests of management with those of other shareholders(Jensen and Meckling 1976).
Legal person ownership with respect to legal