| Corporate governance disclosure has seen renewed interest by researchers, policy makers, and regulating bodies. Corporate governance disclosure had continued as the subject of several studies internationally, but remained only an emerging construct in Nepal. The primary purpose of this nonexperimental quantitative study was to assess the extent of mandatory corporate governance disclosure in Nepal. The secondary purpose was to examine the associations between the extent of disclosures and five firm-specific characteristics. A correlational analysis was used to assess associations between the variables. Considering the significant associations between the test variables, the study pursued further inquiry to identify significant determinants to explain variations of disclosure. The study's sampling frame consisted of the list of 125 banking and finance companies listed with Nepal Stock Exchange as of 16 July 2010 and the sample size of 59 companies were selected using random sampling method. On average, companies disclosed 90.6 percent of items in the mandatory disclosure index (SD=5.6%). At the same time the mean disclosure score in the voluntary category was 47.5 percent (SD = 17%) and 73.9 percent (SD = 9.2%) in total. A significant and positive correlation between governance disclosure and firm characteristics of size [r (57) = 0.68, p <0.05], leverage [r (57) = 0.41, p <0.05], and foreign ownership [(rho (57) = 0.29, p <0.05] was found, whereas no significant relation between governance disclosure and listing age or profitability was found. With regards to determinants, bank size was a significant predictor of governance disclosure (t=4.92, p<0.05). The model with three predictor variables of corporate size, leverage, and foreign ownership was significant and explained almost half [R² = 0.47; F (3,55)=16.51; p<0.05] of the variations in corporate governance disclosure in Nepal. It is recommended that companies provide more narratives about best practices in corporate governance and communicate them in a timely manner. Regulators in Nepal need to enforce the disclosure provisions more rigorously. A study with additional variables is suggested to evaluate the 53 percent of unexplained variations in disclosure found in this study. Apart from the annual reports, other mediums like web-based disclosure may be evaluated. |
