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Research Paper | Finance | China | Volume 8 Issue 9, September 2019 | Popularity: 7.2 / 10

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Corporate Governance and the Voluntary Disclosure of Intellectual Capital in a Period of Financial Crisis: Case of Selected Listed Companies in Zimbabwe

Faith Tandi, Junjuan Hu, Xiaoling He, Yongzhen Zhu

Abstract: This research paper focused on corporate governance and voluntary disclosure of intellectual capital in a period of financial crisis. It explores the cross- sectional effect of the industry, company size, gearing, listing status and corporate governance mechanisms on the extent of voluntary disclosure of intellectual capital reporting in 64 companies listed at the Zimbabwe Stock Exchange for the period from 2017-2018. The aim was to determine the extent of IC reporting in corporate reports in the context of Zimbabwe in a period of financial crisis and assess if there is a relationship between capital employed, company turnover, multiple listing, gearing, profit before taxation, proportion of non-executive directors and the extent of intellectual capital reporting in corporate reports. The extent of intellectual capital reporting was measured by a disclosure index based on the intellectual capital attributes included in the narratives and illustrations of the annual reports. The results indicate that voluntary disclosure mainly occurs within the confines of Relational Capital attributes. Company turnover, multiple listing, gearing and committee financial expertise are relevant factors in explaining the differences in reporting behavior amongst Zimbabwean companies. This was based on the prediction that the agency costs can be reduced through the voluntary disclosure of intellectual capital which may also mean that the benefits of signaling outweighs the competitive costs that are prevalent in some industries. This research study also involves panel regression analysis with Random and Fixed effect for the years 2016 to 2018 and the empirical findings on the relationship between capital employed, company turnover, multiple listing, gearing, profit before taxation, proportion of non-executive directors and the extent of intellectual capital reporting in corporate reports of Zimbabwe Stock. VDIC is significantly and positively contributing towards the success of the firms under study for about 0.39 % in the case of common effect model and 0.13 % both in the cases of RE and FE models.

Keywords: Corporate governance, Financial risk, Industry, Intellectual Capital IC, Listed Companies, Voluntary disclosure

Edition: Volume 8 Issue 9, September 2019

Pages: 1783 - 1790

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