Ownership Structure And Voluntary Disclosure Of Listed Industrial Goods Companies In Nigeria

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Ownership Structure And Voluntary Disclosure Of Listed Industrial Goods Companies In Nigeria


Abstract


This study is on ownership structure and voluntary disclosure of listed industrial goods companies in Nigeria. The total population for the study is 200 staff of Dangote group of company, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made managers, production managers, cashiers and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


1.0 Introduction

1.1 Background of the Study

Annual reports are the primary medium various stakeholders rely on for making decisions. Thus management, responsible for preparing the annual reports, is accountable to all the stakeholders. As a result, they should disclose all relevant information in the annual reports for stakeholders to make efficient economic decisions. In addition, increased disclosures of information, apart from the ones required by the standards and the regulators are important. These additional disclosures protect the interest of minority shareholders and ensure transparency of company’s information to its interested parties. Meek, Roberts and Gray (1995), define voluntary corporate disclosure as disclosures in excess of requirements in annual reports and other media as deemed relevant by the company management for an effective decision-making by the users of the financial reports. However, agency theory assumes a separation of ownership from control would lead to agency problems, as the agents will not always maximize the shareholder value. And hence, the incentive for the management to provide additional disclosures decreases. Moreover, the controlling shareholders in a company mostly maximize their self-interest rather than that of the minority shareholders. Thus, there is increased emphasis on the need to ensure the protection of the interests of minority shareholders. Minority shareholders are entitled to receive all relevant information to make an informed judgment on the performance of the company. Disclosure of less voluntary information to the minority shareholders is one way controlling shareholders expropriate minority shareholders. Most of the disclosure studies examining the association between ownership structure and voluntary disclosure were conducted elsewhere around the world (such as Eng & Mak 2003, Ghazali & Weetman 2006, El-Gazzar 1998, and Barako, Hancock & Izan 2006). However, the impact of ownership structure on corporate voluntary disclosure practices, remains unexplored in emerging stock markets especially Nigeria. The main objective of this study is to examine the impact of ownership structure on voluntary disclosure in the Nigerian listed industrial goods companies


1.2 Statement of the Problem

Voluntary disclosure information is very pertinent to stakeholders of’ an organization but it has been noted that quite a number of companies do not engage in voluntary disclosure of information must companies comply with the mandatory disclosure requirements and end it there this should not actually be the case. It is has therefore become of’ utmost importance to trace the root cause of lack of voluntary disclosure in companies and determine what exact responsible for their lagging behind. Could it be as a result of mere ignorance or the fact that they have something to hide or simply because the performance achieved is not commensurate with the expectations of stakeholders. Corporate disclosure of financial information became an important issue in Nigeria following the financial crisis of 2008. Voluntary disclosure is an issue which has come into the forefront and attracted much interest in accounting literatures in recent times. What lies behind this interest is the aim to identify the factors which underpin the factors affecting voluntary disclosure of information by the firms to inform the decision makers about financial information and those who prepare and use this information (Agca and Onder. 2007)


1.3 Objective of the Study

The objectives of the study are;

  1. To ascertain if a significant positive relationship exist between voluntary disclosures and return on capital employed.
  2. To ascertain if a significant positive relationship exist between voluntary disclosures and profit after tax
  3. To ascertain if a significant positive relationship exist between voluntary disclosures and dividend per share.

1.4 Research Hypotheses

Hypothesis One
  • HO: there is no significant positive relationship exist between voluntary disclosures and return on capital employed
  • HI: there is significant positive relationship exist between voluntary disclosures and return on capital employed
Hypothesis Two
  • HO: there is no significant positive relationship exist between voluntary disclosures and dividend per share
  • HI: there is significant positive relationship exist between voluntary disclosures and dividend per share

1.5 Significance of the Study

This study will be beneficial to organizations, students and the general public. This study will bring more ideas to the stakeholders of the company concerning the report of the organizations for the progress of the company. It will also serve as a reference to other researchers that will embark on this topic.


1.6 Scope and Limitation of the Study

The scope of the study covers ownership structure and voluntary disclosure of listed industrial goods companies. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


1.7 Definition of Terms

Ownership Structure:

For many new businesses, the best initial ownership structure is either a sole proprietorship or if more than one owner is involved a partnership. Sole Proprietorships. A sole proprietorship is a one-person business that is not registered with the state like a limited liability company (LLC) or corporation.

Voluntary Disclosure:

Voluntary disclosure is the provision of information by a company’s management beyond requirements such as generally accepted accounting principles

Industrial Good:

In economics, goods are materials that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods that are tangible property, and services, which are non-physical.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain ownership structure and voluntary disclosure of listed industrial goods companies in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of ownership structure and voluntary disclosure of listed industrial goods companies in Nigeria


5.2 Summary

This study was on ownership structure and voluntary disclosure of listed industrial goods companies in Nigeria. Three objectives were raised which included: To ascertain if a significant positive relationship exist between voluntary disclosures and return on capital employed, to ascertain if a significant positive relationship exist between voluntary disclosures and profit after tax, to ascertain if a significant positive relationship exist between voluntary disclosures and dividend per share. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Dangote group of company, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made managers, production managers, cashiers and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

Based on the empirical results, the study concluded that institutional ownership and managerial ownership has an insignificant effect on voluntary disclosure, while block ownership has a positive and significant effect on voluntary disclosure listed industries in Nigeria. The study used only Dangote group of company.


5.4 Recommendation

Based on the findings, this study there for recommended that

  1. Companies should engage in voluntary disclosure of information which are industry specific and which are useful to its investors and stakeholders.
  2. The regulatory authorities that are charged with the responsibilities of regulating the information disclosed in financial reports should review their disclosure requirements and incorporate voluntary disclosure items into them. This would help to increase the level of transparency thereby providing a clearer picture or the state of affairs of a company, which would help prevent the problem of information asymmetry. It should be noted that if these disclosure requirements are adequately enforced, it will give more credibility to the Nigerian Stock Exchange (NSE) market and foreign investors will be more willing to invest in Nigerian companies thereby improving the Nigerian economy generally.
  3. The enforcement unit of the Financial Reporting Council should be empowered to impose appropriate sanctions on companies that violate the financial reporting requirements.

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