Voluntary Disclosure by Saudi Companies

Abstract

In a developing country, such as Saudi Arabia, which depends on real time information, investigating voluntary disclosure is crucial for the capital market efficiency and shareholders satisfactory. A firm’s voluntary disclosure is important to reduce the level of information asymmetry and increase the firm’s credibility in the capital market. This study reports on voluntary disclosure practices of Saudi non-financial publicly traded companies listed in the Saudi Stock Market (Tadawul) during the period 2012-2013, and relates the extent of disclosure to : corporation size, auditor size, leverage, profitability, and listing age. A disclosure index has been developed and statistical analysis is performed using multiple regression analysis. Voluntary disclosure varies widely within a sample of 116 non-financial publicly traded companies during the period covered. The findings indicated that firms, on average, report 0.29 percent of the voluntary information. Further, in an effort to examine the relationship between the voluntary disclosure level and firm specific characteristics, the results of the regression analyses indicated that corporation size, profitability, and listing age have significant positive association with voluntary disclosure level in annual reports, however, auditor size and leverage do not have any significant association with voluntary disclosure level.

Keywords: Voluntary Disclosure; Annual Reports; Saudi Arabia