EFFECT OF CORPORATE GOVERNANCE ON VOLUNTARY DISCLOSURE OF LISTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

Voluntary disclosure (VD) plays a vital role in capital market efficiency by reducing information asymmetry and agency conflicts between management and investors. This study investigates the effect of corporate governance characteristics on the extent of voluntary disclosure among listed manufacturing companies in Nigeria. Specifically, it examines the influence of board size, board composition, audit committee meetings, managerial ownership, and ownership concentration on voluntary disclosure practices. An ex-post facto research design was adopted, with a sample of 39 out of 64 listed manufacturing companies selected through filtering criteria. Data were extracted from audited annual financial statements over a 10-year period (2014–2023). A disclosure index, measuring the ratio of disclosed items to total expected items in the ESG disclosure framework, was used to quantify voluntary disclosure. Multiple regression analysis, using the pooled OLS model confirmed by the Lagrangian Multiplier test, was employed to analyze the data. The result revealed that board size, board composition, and ownership concentration had a positive and significant effect on voluntary disclosure. Audit committee meetings showed a positive but insignificant relationship, while managerial ownership had a negative and insignificant effect. The study concludes that strong corporate governance enhances transparency in financial reporting among manufacturing firms in Nigeria. It recommends that the Financial Reporting Council of Nigeria mandate the disclosure of environmental, social, and governance (ESG) information to ensure comprehensive reporting and reduce agency-related concerns among investors.