Summary and Conclusions

This chapter has reviewed relevant empirical disclosure studies that have measured the extent of voluntary disclosure in the corporate annual reports and investigated its association with certain corporate specific-characteristics, classified as those applied to non-banking sector companies and those applied to banking sector companies specifically. The review shows that there were numerous empirical studies which investigated the extent of corporate voluntary disclosure and its relationship with certain corporate attributes in a variety of different countries, which include both the developed and developing countries. However, the vast majority of these studies have focused primary on voluntary information disclosures in non-ban ing company’s annual reports in those countries.

Remarkably, all of the empirical disclosure studies reviewed in the section (2.2) have suggested to exclude the banking sector and other financial institutions from the sample due to their different reporting requirements and disclosure regulations and their business activates being unique from other economic sectors.

Overall, all the prior empirical disclosure studies reviewed in this chapter employed a disclosure index as an appropriate research method to measure the extent of voluntary disclosure in corporate annual reports, with the exception of the studies which have examined social disclosure practices (i.e. Menassa, 2010; Abdul Hamid, 2004). The number of voluntary information items selected to form a disclosure index varies among prior disclosure studies. Most previous academic researchers who have measured the level of voluntary information disclosed in the annual reports have constructed a list of

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information items based either on review of the relevant accounting literature or on their own perceptions.

In these empirical disclosure studies, both weighted indices and un-weighted indices have been widely used by most previous researchers to determine the level of voluntary information disclosure in annual reports. A large number of reviewed studies measured the voluntary disclosure practices for a single country and a single year, while a very small number of these studies attempted to measure the level of voluntary disclosure practices cross nationally.

Previous researchers who have attempted to measure the extent of voluntary disclosure in the annual reports have also sought to investigate its association with certain company attributes such as age, company size, listing status, profitability, liquidity, author type, industry type, ownership structure, and so on.

As can be seen from sections 2.2 and 2.3, the number and types of company characteristics (independents variables) used to test their possible impact on the extent of voluntary disclosure in the annual reports varied from one study to another. The review of literature has also shown the majority of prior research found a relationship (positive/or negative) between certain corporate specific-characteristics and the extent of voluntary disclosure of various types of information.

The majority of empirical voluntary disclosure studies reviewed in this chapter have used multiple linear regression method to test the relationship between the extent of voluntary disclosure practices (dependent variable) and corporate attributes. However, prior empirical studies have provided mixed findings in different countries in such relationships.

In particular, as seen in section 2.3, there is a very small number of empirical studies that investigate the overall extent of voluntary disclosure and its relationship with certain commercial bank attributes. In addition, the empirical evidence from those studies was conflicting and not conclusive, some of bank-specific attributes examined in the reviewed studies were found to be significantly associated with the extent of disclosure in one study while in other studies these were found not to have a significant impact on the disclosure level.

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For example, Hossain (2008) found a significant statistical relationship between profitability and the extent of voluntary disclosure practices in Indian banks, whilst similarly a study by Hossain and Taylor (2007) found no significant association between profitability and voluntary disclosure practices in Bangladeshi banks. In addition, there are other additional bank attributes that are likely to influence the extent of voluntary disclosures which remain unexplored (e.g. bank liquidity position, listing status and government ownership structure).

Further, the present empirical evidence on the determinants of overall of voluntary disclosure in the annual reports of banking sector companies is very limited as compared to evidence from non-financial companies. Therefore, there is a need for moreempirical evidence from different countries about the influence of bank attributes on the extent of voluntary disclosure to enhance a better understanding of the relationship between these attributes and banking disclosure. Also, much empirical study is still required in this area to confirm or disprove the prior findings.

In addition, none of the studies have examined the extent of voluntary disclosure in annual reports of listed and unlisted commercial banks longitudinally, and examined the trends of voluntary disclosure practices over time from one year to the next. In particular, a review of the literature of previous research shows that no empirical studies have documented the extent of voluntary disclosure practices in the annual reports of Libyan listed and unlisted commercial banks.

Consequently, the current research attempts to fill the existing gap in the disclosure studies literature and contribute to ongoing research addressing voluntary disclosure through a longitudinal examination of the extent of voluntary disclosure in the annual reports of Libyan listed and unlisted commercial banks, and also to examine the influence of seven commercial bank-specific attributes on the overall level of voluntary disclosure.

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