The Mediating Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance among Listed Jordanian Companies

International Journal of Research and Scientific Innovation (IJRSI) | Volume VII, Issue VII, July 2020 | ISSN 2321–2705

The Mediating Effect of Voluntary Disclosure on the Relationship between Corporate Governance and Financial Performance among Listed Jordanian Companies

Ibrahim Mohd Al Hamadsheh, Barjoyai Bin Bardai, Abdoul Rahman Mhd Al Jounaidi
Department of Accounting, Al-Madina International University, Kualalumpur-Malaysia

Abstract- The all-round disclosure of financial statements was a global problem since the last decade. Indeed, the “profit and loss” report is important as it reflects the operational indicators of the company. The more transparent the “profit and loss” report, the more useful it is for the potential and current investors when making their investment decision. In other words, the more the firms disclose about the numbers included in the financial statement, the higher is their level of transparency. The purpose of a financial statement is to assist transparency while also providing a high-quality annual report for fuller disclosure of information. It also promotes the establishment of standards of accounting and laws concerning financial reporting. Two forms of financial reports are available: Compulsory and voluntary reporting. In particular, Compulsory information disclosure represents the main market necessity for info needed by varied laws and regulators, and it is governed at the national or regional level by the public authorities or professional organizations. On the contrary, corporate voluntary disclosure, which exceeds the disclosure demands, is the right choice for managers to disclose annual reports to users. The basic curiosity in the researcher’s mind is the extent to which voluntary disclosure is able to enhance financial performance, and what factors influence the company’s financial performance of listed in the Amman stock exchange through the corporate governance structure. The main objective of this study is to examine the extent of voluntary disclosure within the annual reports of Jordanian listed corporations and to examine the relationship between corporate governance mechanisms and Financial performance (FP) within the annual reports of Jordanian listed corporations. A research method will be used in the Jordanian context, namely archival and method since the nature of the data required for conducting this survey on Jordanian companies emphasizes the need for secondary data to be a major source of information because secondary data assist in defining contemporary evidence. The data obtained between 2012-2017 from the Annual Report of Amman Stock Exchange from 208 companies in the manufacturing and services sector. Moreover, information from this period is the most recent source of information at the time of research. The sample of this study was restricted to the Service sector and industrial sector which altogether include 208 corporations representing 84% of the total number of corporations listed in the ASE.
In the analysis used version 18 of (SPSS) program, and the descriptive analysis was used in this research. The results showed that the board (BCOM), Board activity (BACT), Board size (BSIZE), audit committee Size (ACS), Board Independence (BORDIN), Foreign Ownership (FOW) and Institutional Ownership (IOW). The H02, H03, H04, H05, H06, H07, and H09 were supported. In comparison, two ways of returning on assets (ROA) is statistically insignificant, since their p-values are above the normal level of significance of 0.05, the Audit Committee independence (ACOM) and Government Ownership (GOW). H01 and H08 were therefore rejected. The most theoretical implications for this study Is that this research bridges the gap created by the past works by defining these factors that affect financial performance. As shown by the results obtained, all factors impact financial performance. A research framework on the financial performance among listed Jordanian companies had been proposed in this study and empirical tests had been performed on it. Also, the most practical implications for this study Is that this research inspecting the variables from each external factor, to identify the one with the greatest effect on the financial performance Assesses the relationship between voluntary disclosure and financial performance. One of the most important determinants of this study is the information that will be obtained may be incomplete in the form of unreported corporate governance, concealed directors, or undisclosed ownership levels. An important recommendation for future studies in this study is future work should consider including more services on business which could include the in-side and out-side company services. The study conclusion highlights the development and testing of the financial performance of a structural model. The model that this study had devised is grounded on the model of AT and RDT, LT, CNT, ST in addition to the applicable constructs obtained from the secondary data as well as the studies on financial performance. Finally, from the current study, shareholders and management will know that they are responsible for deciding the extent of voluntary disclosure. This will then prohibit them from expropriating the property of the company for their own use.

Keywords: Voluntary Disclosure, Corporate Governance, Annual Reports, Audit Committee Independence, Board Compensation, Financial Performance

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