Abstract
The objective of the study was to investigate the effect of bank-specific and corporate governance mechanisms on the financial and social disclosure level of Ethiopian commercial banks. To address this objective, six years of secondary data were collected from seventeen commercial banks. Financial and social disclosure levels, measured using an unweighted disclosure index, were used as dependent variables, while bank-specific characteristics (such as profitability, age, size, leverage, and liquidity) and corporate governance mechanisms (such as board size, board diversity, board independence, audit committee size, and audit committee independence) were used as independent variables. Generalized Least Squares (GLS) estimation was used to examine the association between dependent and independent variables and to test the hypotheses. The results evidenced by GLS regression revealed that profitability, bank size, and board size have a significantly positive effect on financial disclosure. Conversely, leverage, liquidity, and audit committee independence significantly negatively affect financial disclosure. However, age, board diversity, and audit committee size have no significant effect on the financial disclosure level of Ethiopian commercial banks. Moreover, the results documented from FGLS estimation indicate that profitability has a positive significant effect on social disclosure, whereas liquidity 2023and board independence have a significantly negative effect on social disclosure. However, age, bank size, leverage, board size, board diversity, and audit committee independence do not significantly affect the social disclosure level of Ethiopian commercial banks.
DOI: https://doi.org/10.21863/ijbri/2024.12.2.001
Keywords: Financial Disclosure, Social Disclosure, Bank Characteristics, Corporate Governance Mechanisms
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