Financial reporting and corporate governance disclosures of Indian banks: an empirical analysis

The study focuses on the financial reporting practices of Indian banking companies. Its purpose is to examine empirically, the ~ssociation between a number of corporate attributes and levels of disclosure in corporate annual reports as well as to determine the quality of financial reporting. Most of the previous research in this area has concentrated on non-financial companies in both developed and developing countries, with the result that research on financial companies, and especially banking companies, is limited. India is the largest country in South Asia with a huge financial system and banks that were established according to the British pattern. Recent financial stress in East Asian economies, has urged the \Vorld Bank, and IMF to promote financial stability and greater disclosure and transparency in banking companies. Within this framework, and in order to measure more specifically, the extent of disclosure, the study covering 38 banks (68% of the sample) listed on the stock exchanges in India, has been undertaken. A total of 184 items of information comprising both mandatory (101) and voluntary (81) items have been selected, and a linear regression model has been developed in order to examine the relationship between various corporate attributes and the level of disclosure. The findings indicate that age, diversification, profitability, corporate governance, stock exchange, complexity of business and assets-in-place variables are significant, and other variables such as age, audit, dividend, are insignificant in explaining the level of disclosure. In addition, in terms of disclosure compliance, Indian banks scored as high as 97 with an average of 88 in mandatory items, whilst in respect of voluntary items, 34 was the highest score, with an average of25. The above findings indicate that Indian banks are very compliant with the mandatory rules and regulations, and thus will build up confidence among global investors, depositors and regulatory authorities as well as international financial institutions. On the other hand, it is found that Indian banks are far behind in disclosing voluntary items. However, the extent of overall disclosure depends on companies' attributes. This study has contributed to the academic literature highlighting the phenomenon that if there is an existence of a close monitoring system including regulatory authorities and regulations in the country, it is possible to have high compliance with disclosure legislation. This is obviously true in the case of India and the Indian banking sector. The outcome of the study will be of help to policy-makers concerned with practices associated with financial reporting in the developing countries in particular, thereby instilling confidence among global investors in the Indian financial sector.EThOS - Electronic Theses Online ServiceGBUnited Kingdo