Statistical Tests and Analysis

This section aims to provide a brief outline of the statistical techniques that were employed to analyse the obtained data. The employed techniques are classified into two groups according to the used research instruments (questionnaire and content analysis). In reference to the study’s objective, the questionnaire instrument was developed to achieve objectives 1, 2 and 3, while the disclosure index instrument was constructed for the objectives 4, 5, 6 and 7. Therefore, to achieve the first three objectives of this study, the next chapter (6) provides the descriptive and inferential analyses of the questionnaire survey and a discussion of the findings of the questionnaire. With regard to objectives 4, 5, 6 and 7, Chapter Seven provides the descriptive and statistical analyses for estimating the relationships among the study’s variables.

5.6.1Tests and Analyses of the Questionnaire

This section outlines the set of statistical analyses and tests that were used in analysing the questionnaire survey. There are two broad procedures for statistical tests, parametric and non-parametric. The choice between the two types relies on the data and the essential assumptions of the tests. According to Field (2013), there are four essential conditions determining the parametric notion, namely normality, homogeneity’, interval and independent. For data to be parametric, it should be normally distributed; homogeneous not

change systematically; based on an interval scale and independent if the data is from different subjects.

If any of these assumptions was not met, for whatever reason, a parametric test could not be employed, however, a non-parametric test can be used instead depending on the related study objective. However, Field (2013) argues that non-parametric tests are not as powerful as parametric tests and highlights the misleading results of using parametric tests with non-parametric data. As the response data of this study was not normal, a non- parametric analysis was employed comprehensively to achieve objectives 1 and 2 of the study. As an example, to analyse participants’ responses across the user groups to evaluate the significance of differences in the sample means, the Kruskal-Wallis H test is the non- parametric version of the parametric one-way ANOVA test. The Kruskal-Wallis H test was employed with a conventional 5% confidence level. Any significant value for the Kruskal- Wallis H statistic indicates that there is a difference between at least one of the groups’ means and at least one of the others.

5.6.2Tests and Analyses of the Disclosure Content Analysis

There are a number of statistical techniques that could be employed to analyse data and test research hypotheses. Previous studies have used univariate and multivariate analysis techniques to examine the association between firm specific-characteristics (independent variables) and the level of disclosure (dependent variable) (e. g. Adelopo, 2011; Aljifri, 2008; Aljifri et al., 2014; Alsaeed, 2006; Cooke, 1989a; Hossain & Hammami, 2009; Hossain et al., 1994; Lopes & Rodrigues, 2007; Omar & Simon, 2011; Owusu-Ansah, 1998). In addition, recently, univariate and multivariate analysis techniques have been widely employed to test the proposed association between firms’ corporate governance characteristics and ownership structure (explanatory variables) and corporate disclosure behaviour in annual reports (dependent variable) (Alhazaimeh et al., 2014; e. g. Elshandidy et al., 2013; Fathi, 2013; Gisbert & Navallas, 2013; Khiari, 2013; Ntim et al., 2013; Qu et al., 2013; Samaha et al., 2015; Wang & Hussainey, 2013).

In this study, univariate and multivariate statistical analysis techniques are used to investigate the association between corporate governance variables, ownership structure variables, firm characteristics and the level of disclosure in Libyan firms’ annual reports. To achieve the third objective of the research, Chapter Seven provides a descriptive

analysis of the results of the index over the five years. It starts by assessing the reliability and validity of the disclosure index, followed by analysing the comprehensive disclosure level then the categories of the disclosure index. Regarding the association between determinants of corporate disclosure and the extent of disclosure, an Ordinary Least Squares (OLS) regression analysis is considered as a common statistical technique used in the relevant disclosure literature (e. g. Beattie et al., 2004; Katmon & Farooque, 2015; Lang & Lundholm, 1993; Maffei et al., 2014; Ntim et al., 2012; Samaha et al., 2012; Sharma, 2014; Wang & Hussainey, 2013).

Univariate analysis: the univariate analysis was performed by using a T-test and Mann

Whitney test for categorical independent variables and calculating Pearson and Spearman correlation coefficients for continuous independent variables.

Multivariate analysis: the multivariate analysis was employed using a multiple regression

model. Similarly to the questionnaire analysis techniques, there are two types of tests that can be used, namely parametric and non-parametric. In order for a decision to be made regarding which type to use, some assumptions must be tested. These assumptions must be satisfied to use parametric techniques, otherwise non-parametric techniques are the alternative (Field, 2013). The regression assumptions that must be satisfied to justify employing the parametric tests are linearity; normality of the error distribution; homoscedasticity; and independence of error terms. In addition to this, there should be no perfect multicollinearity (Gujarati & Porter, 2009).

5.6.2.1Regression Models

In the current study, a linear-multiple regression OLS was employed to examine the association between the independent variables of corporate governance attributes and ownership structure and the dependent variable of corporate disclosure in the Libyan context. The following model has been employed to investigate the relationship between corporate disclosure behaviour and each of corporate governance, ownership structure, and firm characteristics:

Comprehensiveness of disclosure = β0 + β1BoardS + β2DualP + β3BoCo + β4FreMee + β5AuCo + β6ForOwn + β7InstOwn + β8GovOwn + β9DirOwn + β10FS + β11FA + β12Gearing + β13Prof + β14Liq + β15Lis + β16IndTyp + β17AudTyp + β18Year + e.

where,

Comprehensiveness of disclosure is the index score; β0 is the constant term; BoardS is the board size; DualP is the role duality; BoCo is the board composition; FreMee is the frequency of meetings; AuCo is the auditor committee; ForOwn is foreign ownership; InstOwn is institutional ownership; GovOwn is government ownership; DirOwn is director ownership; FS is firm size; FA is firm age; Prof is profitability; Liq is liquidity; Lis is listing status; IndTyp is industry type; AudTyp is auditor type, YD is the year and e is the error term.

5.6.2.2Additional Analyses

A number of additional analyses were conducted to check the sensitivity of the data and the robustness of the results. Firstly, two-stage least squares (2SLS) was employed to check for any potential endogeneity. In addition, two regression models were employed by splitting the sample into listed and non-listed companies. Finally, to detect the presence of non-linear relationships between the explanatory variables and the extent of corporate disclosure, this study re-estimated the scored disclosure level by including the squared values of BoardS2, ForOwn2, GovOwn2, InstOwn2 and DirOwn2.

5.7Conclusion

This chapter has discussed the methodology adopted and research methods used to achieve the research objectives and answer the research questions of this study. It has discussed the research approach adopted and the methods applied to carry out the empirical part of this study, also, data collection procedures were explained in detail. The construction of the research instrument, the questionnaire survey and the disclosure index were also discussed. This study is carried out based on a positivistic philosophy adopting a deductive paradigm in which the researcher went through five sequential stages, starting by deducing hypotheses from theories; articulating the hypotheses in operational and measurable terms; testing the hypotheses; investigating the specific outcomes and results (conform or reject the theory); and finally justifiable modification of the theory if necessary. The main aim of this study is to explore both; (1) the perceptions regarding and (2) the nature and determinants of corporate disclosure behaviour in the annual reports of listed and non- listed firms in Libya where there is a lack of such prior disclosure studies.

To cope with the aim of the study, the deductive approach is adopted starting with developing hypotheses based on a multi-theoretical framework, as indicated in Chapter Three. Therefore, the study is classified as a quantitative study using a questionnaire survey and a self-constructed disclosure index (un-weighted & weighted).