The impact of different types of ownership concentration on annual report voluntary disclosures in New Zealand

Purpose – The purpose of this paper is to investigate the impact of different categories of ownership concentration on corporate voluntary disclosure practices in New Zealand. Design/methodology/approach – The study applies panel data regression analysis to a sample of New Zealand listed companies from 2001 to 2005. Two-stage least squares analysis (2SLS) is conducted. Ownership concentration is categorised into four mutually exclusive ownership structures. Findings – The paper finds that firm-year observations characterised by financial institution-controlled ownership structure tends to make significantly fewer (more) disclosures at high (low) concentration levels supporting expropriation. In contrast, firm-year observations in the high (low) concentration group with government- and management-controlled ownership structures exhibit considerably higher (lower) voluntary disclosure scores, suggesting a positive monitoring effect at high ownership concentration level. Research limitations/implications – The results provide evidence for the proposition that the efficiency of large block holders' monitoring varies with the level of ownership concentration. Practical implications – To promote transparency in capital markets, regulators can encourage or discourage certain types of large shareholding, while monitoring the level of ownership concentration by means of regulation. Investors, especially less sophisticated retail investors, will benefit from the findings that different ownership groups affect disclosure policies differently. Originality/value – The findings strengthen the importance of differentiating ownership structures into various classes to infer the real impact of differential controlling properties on managerial disclosure decisions. Furthermore, the results reveal that the relationship between ownership concentration and voluntary disclosure practices has a non-linear pattern.