International Journal of Disclosure and Governance (2020) 17:168–179

https://doi.org/10.1057/s41310-020-00090-1

ORIGINAL ARTICLE

The effect of voluntary disclosures and corporate governance on firm

value: a study of listed firms in France
Soufiene Assidi1,2 

Received: 28 December 2019 / Published online: 1 August 2020

© Springer Nature Limited 2020

Abstract
This study examines how voluntary disclosures (VD) and corporate governance (CG) improve firm value through the mod-
erating effect of a legal change in a continental context, namely France. Based on a sample of 1001 observations of French
firms listed on the SBF 120 from 2006 to 2016, I experiment with the theoretical assumptions of the study. A generalized
method of moments estimation was used to neutralize the endogeneity problem. I estimated five different models on the
whole sample; then I tested these models by splitting the sample into sectors to check the robustness of our estimations.
Findings show that voluntary disclosure is positively associated with the firm’s value. The empirical results also indicate
that a change in the law, as a moderate variable, helps to widen the firm’s benefit by the development and improvement in
its sound governance system. Moreover, this outcome is reliable with the view that the nexus between VD and CG can add
value for the firm in the presence of favourable jurisdictions. This research provides guidelines for investors, managers and
policymakers to increase firm value by the application of the best practices of VD and CG in the presence of an advantageous
law. To improve their reliability and performance, firms adopt a good mechanism of governance that is harmonious with the
law and disclose more voluntary information to attract investors. These results offer new insights to the voluntary disclosure
and firm value literature. I suggest that the application of the directive 2013/34/EU improves the corporate governance sys-
tem. Also, the quality aspect of information disclosed in annual reports increases the firm value. Second, I investigated the
interaction between VD and firm value in the presence of a CG mechanism and interaction variables.

Keywords  Voluntary disclosure · Corporate governance · Change of law · Firm value · GMM

Introduction guidance to motivate firms to offer more adequate voluntary

For several years, information has been the cornerstone in
economies; the types of its disclosure, its governance and its
content have become influential for decision making as well
as creating a firm’s value. Therefore, the effect of voluntary
disclosure motivates several research streams in accounting.
Stakeholders’ needs for information are not met by manda-
tory disclosures; thus, voluntary types of disclosures have
been at the core of stakeholders’ needs. To protect stakehold-
ers’ welfare, regulators have to establish rules and deliver
* Soufiene Assidi
assidisoufiene@yahoo.fr
1 firms do not usually disclose every required piece of infor-
Department of Accounting, College of Business, Jouf
University, Sakaka, Saudi Arabia
2
GEF2A Lab, ISG, Tunis, Tunisia
information (SEC 2014).
Investors rely on different sources of information to make
sound decisions. An annual report is a communication tool
between an emitter, the firm and several receivers (external
users) (Firth 1978). It is the main source of accounting infor-
mation for investors (Alves et al. 2012; Botosan 1997). Thus,
the constituents of annual reports determine the importance
of the related concept of so-called narrative accounting or
report disclosure. This importance of the reports has been
revealed by the financial accounting standards board (FASB)
showing that qualitative information must be relevant. This
information assists investors in assessing the predictive and
confirmatory value to help decision makers. Therefore,
meaningful and relevant disclosures need to be made by
firms to meet stakeholders’ needs for information. However,
mation by stakeholders (Abdo et al. 2018). In this context,

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The effect of voluntary disclosures and corporate governance on firm value: a study of listed…
Hütten and Sessar (2011) argue that some firms disclose all
risk exposures in a narrative annual report.
Inconsistencies in reported results of empirical studies on
voluntary disclosures, firms’ value and performance stem
from diverse factors. First, there is the ambiguity of the defi-
nition of voluntary revelation in the literature and the vari-
ation of measurement (information features). Second, the
readability of the information represents an important role
in explaining the content of the document and the reader’s
interpretation capacity. The narrative reports in accounting
should be readable to help investors in their decision making
(Moreno and Casasola 2016). Aerts (1994) indicated that
the content of firms’ annual reports and accounts should
include its future program and explain in the simplest way
its activities to transmit a positive message to investors.
Rutherford (2018) showed that many firms manipulated
the production of reports by the different types of presenta-
tions or by revealing erroneous information to influence the
users. These firms do not prefer to disclose their risk for the
investors and do not respect the governance and transpar-
ency procedures. These are some of the reasons that make
disclosure vary between firms and aggravate the information
asymmetry problem.
The topic of voluntary disclosure has attracted the atten-
tion of researchers and has relevant managerial implications.
A large part of the literature on disclosure, and particularly
the voluntary type of disclosure, has focused on American
firms (Silva-Gao 2012). However, the literature has con-
centrated on the change of corporate governance law and
its effect on the firm’s value. Voluntary disclosure depends
heavily on the corporate governance system and the owner-
ship structure. A business disclosure environment is impor-
tant and will be affected by executives’ insights into the costs
and benefits to obtain the best outcome for the firm. Previ-
ous research has proven that top executives’ and managers’
styles and personal attributes have an impact on voluntary
disclosure (Bamber et al. 2010).
In this study, I shed light on the corporate governance sys-
tem in France, as it has been changed following an increase
in the number of foreign shareholders and the need for a uni-
fied code for all investors in the EU. The legal corporate gov-
ernance code, AFEP-MEDEF, has changed many times since
2003 (2007, 2008, 2010, 2013). This code requires points
of vigilance that cannot take place in recommendations and
also in the application of real governance. Similarly, this
code lacks the rules of ethics and confidentiality that are
required to allow the chairman of the board to engage with
investors. Regulation has also been used to address market
failures and restore public confidence. The French corporate
governance system needs to enact more rules to converge
with the best existing practices.
In addition to the publication of annual reports, it is
compulsory for French listed firms to declare their revenue
169
quarterly and to publish their net income every 6 months.
Most French firms are characterized by the concentration
of ownership and control (family or individuals). These
characteristics break the agency problem between minor-
ity shareholders and controlling shareholders and inflame
agency costs (Shleifer and Vishny 1997). The current study
aims to offer a complete analysis of the interactions among
VD, the governance system and a firm’s value moderated by
the change of law in the French context.
This research extends the current disclosure and govern-
ance mechanism literature in different aspects. First, the
study broadens our knowledge on the relation between VD
and CG, in the presence of legal change, and the firm value
by focusing on the nexus between VD and CG and firm value
before and after the change of law. Furthermore, I extend the
theoretical research by dividing the sample into three sub-
groups categorized by the sector of activity. Results show
no significant modifications. Therefore, the sector of activ-
ity is not important at the level of VD and governance. I
contribute to agency theory by examining the relationships
among VD, CG and firm value for the continental context,
which does not consider the separation between ownership
and control as relevant. My results shine new light on the
importance of VD and CG practices in the firm strategy and
the role of law in achieving optimal economic results.
The rest of this paper is organized as follows. In “Litera-
ture review and hypothesis development” section reviews
the existing literature. In “Methodological approach” sec-
tion develops the empirical hypothesis. In “Results” sec-
tion describes the data set and the method used to develop
the score of voluntary disclosure. In “Conclusions” section
provides empirical findings, and in “Appendix” section con-
cludes the paper.
Literature review and hypothesis
development
Literature review
The theoretical foundation of voluntary disclosure stems
from positive accounting theory (PAT), which highlights
the good clarification of accounting methods that directors
can use to disclose more information to increase a firm’s
legitimacy. However, disclosures come with extra costs,
which may sometimes not justify making any further dis-
closures (Abdo 2018). Cho and Patten (2007) undertook a
legitimacy-based examination of environmentally related
disclosures. The authors showed that despite the inclusion
of financial control variables in the empirical analysis, dis-
closure is associated negatively with firm performance.
Several studies have called for an obligation to issue nar-
ratives related to matters that affect firms’ performance and
 S. Assidi
170
value. Such disclosures may affect investment decisions as
well as the firm value (Rutherford 2018; Beattie 2014; Fran-
kel et al. 2010; Davis et al. 1993). Previous literature on
voluntary disclosure has been split into three streams: one
focused on the “incentives” of voluntary information (Wel-
ker 1995; Terry and Cooke 1992; Chow and Wong-Boren
1987), a second concentrated on the “extent or measures”
of the voluntary information (Kolsi 2017; Assidi and Omri
2012; Botosan 1997), and a third stream that has studied the
“consequences” of voluntary disclosure (Miller 2002; Leuz
and Verrecchia 2000).
In this paper, I discuss theories that explain the underpin-
ning reasons for firms to voluntarily disclose information.
Although different theories have advanced different argu-
ments, the main consensus is that information disclosure
satisfies the different users of information (Terry 1992).
Agency theory confirms that conflicts of interest among
shareholders and managers are expected to rise when a prob-
lem of asymmetric information occurs (Jensen and Meck-
ling 1976). The problems of divergent interests could be
minimized by providing more information to the principal.
According to signalling theory, firms disclose information to
offer positive indicators to the investors (Watts and Zimmer-
man 1986). Furthermore, the existing research recommends
that the judgment of whether or not to provide disclosures
is influenced by numerous factors (Inchausti 1997; Terry
1992).
There is limited research that has studied VD, a report
that enhances the information content and attracts research-
ers’ intent, as it differs from conventional reports. Beattie
(2014) noted that because of a financial report’s incompre-
hensibility the report is not sufficient for investors to make
the best decision. Thus, narrative reports must be used to
help users to assess the situation of firms. Bonsall and Miller
(2017) studied the effect of voluntary revelation on the clas-
sification of funds by the rating agencies. That study finds
that corporate agency ratings are focused on non-qualita-
tive information because it gives options about default risk.
VD increases the accuracy of financial analyst forecasting
(Leung et al. 2015; Merkley et al. 2013).
The content and the role of annual reports is under current
debate by many researchers (Yekini et al. 2016; Davis and
Tama-Sweet 2012; Frankel et al. 2010). In the American
context, the SEC (2014) indicated that the voluntary disclo-
sure report affects negatively the share price and will also
ameliorate the degree of accounting information disclosure.
Therefore, in light of the SEC expectations, this study will
investigate a fertile area for accounting research: governance
mechanisms and voluntary disclosure in French firms.
In the French context, Nekhili et al. (2012) built a disclo-
sure index set based on research and development for a sam-
ple of 64 French listed firms. The authors concluded that the
firm market value increases as the volume of research and
development-related information increases. Lakhal (2007)
concluded that managers disclose less information when the
ownership concentration is high. VD is infrequently done
to raise the share prices in the market. Studies undertaken
in the French context have not taken into consideration the
changing legislative environment in the European Union and
its considerable effect on the governance system, the quality
of disclosure and the expectations of stakeholders.
Hypotheses
This section below presents the study hypotheses that
explain the factors influencing the relation between VD and
firm performance.
Voluntary disclosure
The content of the financial statement is insufficient to make
the best investment decision. VDs offer the best solution
to reduce informational asymmetries and increase transpar-
ency. The index is the most effective way to make this con-
cept operational. This methodological tool has been used in
a multitude of empirical research to measure VD (Cooke and
Wallace 1989). The disclosure of non-financial information
reduces the agency cost and increases transparency in the
firm. Jo and Kim (2007) reported that the absence of trans-
parency increases among the different users and enhances
the firm’s value. The disclosures index gives a feedback loop
around the firm by increasing its transparency and giving
incentives to managers to extend the internal control mecha-
nisms after the increase in the firm’s value in the long run
(Cheng et al. 2014).
Hafzalla (2009) claimed that managers’ disclosures are
pessimistic in leveraged buyouts when they are part of the
transaction. Opportunistically, managers want to reduce the
value of the firm to purchase it at lower prices. The author
proved that reducing the firm value is a motivation for dis-
closing biased information. Shroff et al. (2013) stated that
after the relaxation of “gun-jumping” restrictions by the
SEC (2005), firms have disclosed information more freely
before the equity offering. These disclosures reduce infor-
mation asymmetry and contribute to reducing the costs of
equity capital raising. Lang and Lundholm (2000) explored
the relation between seasoned equity offerings and stock
prices. The authors compared stock prices before and after
the offering, concluding that prices increased 6  months
before offering but decreased drastically after firms revealed
their intention to issue equity. The increase in disclosure led
to an increase in market value.
Biggerstaff et al. (2020) highlighted the topic of oppor-
tunistic trading and the behaviour of managers regarding
insider trading activity. The authors concluded that if man-
agers announce their forecast first, they will be engaged in
The effect of voluntary disclosures and corporate governance on firm value: a study of listed…
opportunistic trading. Also, managers disclose bad news
if they are planning to purchase shares.
In the case of financing acquisitions by their stock,
firms are interested in increasing their firm value. Remain-
ing silent or withholding bad news or future earnings
forecasting is more appealing than disclosing over-opti-
mistic information to investors (Ge and Lennox 2011).
Kimbrough and Louis (2011) concluded that the use of
conference calls is more recommended than press releases
when managers announce favourable information to the
market. By using content analysis of information releases
on mergers, results showed that there is a positive market
reaction towards managers’ conference calls due to a more
detailed and high volume of information.
In the case of mergers and acquisitions (M&A), manag-
ers disclose strong performance in the period post-M&A
to retain their jobs and to relieve the pressures related to
the investment. Misstated financial statements are used
particularly in the post-investment period when the returns
are negative (Bens et al. 2012).
H1  VD is associated positively with firm value.
Independent directors
The presence of an independent director is an impor-
tant attribute characterizing the board of directors. Fama
and Jensen (1983) considered that independent directors
increase the control and reduce managerial opportunism.
Indeed, the presence of a high percentage of independ-
ent directors improves the quality and the transparency of
managers’ decisions. Furthermore, Lim et al. (2007)con-
cluded that independent directors enhance VD of informa-
tion in annual reports. Patelli and Prencipe (2007) found
a positive association between VD and the percentage of
non-executive directors. However, other researchers have
found a negative relationship between independent direc-
tors and VD (Al-Maghzom and A 2016; Lopes and Rodri-
gues 2007). Independent directors are expected to perform
effectively and should control and ensure that managers
give more information to the stakeholders and disclose
more information. Amraha et al. (2015) confirmed that the
effectiveness of the board of directors influences the firm
value. The authors found that family control plays a mod-
erator role and affects this relation positively. VD and the
presence of independent directors increase a firm’s value.
H2  The presence of independent directors strengthens the
association between VD and firm value.
171
CEO duality
CEO duality has been one of the controversial topics in the
finance literature. Agency theory proponents argue that dual-
ity induces conflicts of interests and may degrade the share-
holders’ interests. Stewardship theory argues that holding a
dual role (CEO and chairman) effectively serves the firm.
Prior studies on the association between voluntary disclo-
sure and CEO duality have produced contradictory results.
Ho and Wong (2001) did not find any link between VD and
CEO duality. However, some researchers have suggested
that firms with CEO duality reveal less information (Lakhal
2005; Carcello and Nagy 2004). Thus, I propose the follow-
ing hypothesis:
H3  The association between VD and firm value is stronger
in the absence of CEO duality.
Ownership structure
According to agency theory assumptions, an increase in
the information request is very important in the firm when
there is an information asymmetry between majority and
small shareholders. This means that the ownership structures
are concentrated or dispersed (Hope et al. 2013). From the
agency perspective, the ownership concentration provides
strong decision making (Shleifer and Vishny 1997; Fama
and Jensen 1983). Shleifer and Vishny (1997) showed that
the ownership concentration structure benefits and gives
incentives to managers to protect the owners’ interest. In
the same way, the ownership concentration can also help the
majority shareholders to have a direct dialogue with manage-
ment when formulating firm policies. Other researchers have
proved that ownership concentration is associated positively
with VD and (Khlif et al. 2017; Garcia-Meca and Sanchez-
Ballesta 2010) found a negative association.
H4  The connection between VD and firm value is stronger
in the presence of greater ownership concentration.
Moderating effect of legal change
The governance system of the firm must protect inves-
tors’ funds from possible expropriation by executives. The
manager achieves a sufficient return on the invested capi-
tal (Shleifer and Vishny 1997). Due to the increase in for-
eign investors, firms need a global code for all investors. In
Europe, a good governance code has become mandatory,
and the principle of complying is a special characteristic of
the governance system in European countries. The Directive
(2013/34/EU of 26 June 2013, Article 46a) has been promul-
gated to reinforce the governance system. The consequences
of the existence of VD on firm value in light of the 2013
 S. Assidi
172
change in law need to be explored in the French context.
Also, it is necessary to note that only some firms from our
sample were subject to the requirement of appointing one
or more employee directors in accordance with the law of
14 June 2013.
H5  The 2013 change in law has affected voluntary disclo-
sure and firm performance.
Methodological approach
In this part, I present the research methodology, sample,
data source and econometric methods implemented to test
the study hypotheses. The generalized method of moments
(GMM) estimator is used to examine the effect of VD mod-
erated by the change in law on the firm’s value. The GMM
method is a system estimation applied to dynamic panel data
(Arellano and Bover 1995; Blundell and Bond 1998). I use
the correction for a finite sample proposed by Windmeijer
(2005). I applied the GMM method for two reasons; first,
it provides more efficient estimators than the static panel.
Second, it solves the endogeneity problem that may occur
between the independent variables and the error term. Also,
there are no immeasurable control variables, for example,
the role of internal control to improve the firm’s value.
The GMM system estimator by Blundell and Bond (1998)
combines the first difference equations with the level ones.
11
∑
TQi,t = 𝛼0 TQi,t−1 + 𝛽h Xh,i,t + 𝜂i + 𝜆t + 𝜀i,t (1)
h=1
( )
TQi,t − TQi,t−1 = 𝛼0 TQi,t−1 − TQi,t−2
11
∑ ( ) ( ) tions), the period before the change in law constitutes 63%
+ 𝛽h Xh,i,t − Xh,i,t−1 + 𝜆t − 𝜆t−1 + 𝜀i,t
h=1 (2)
TQit r e p r e s e n t s T o b i n’s Q , w h i c h m e a s -
ures the firm value, and Xit is a vector of the
explanatory v a r i a b l e s (SVDi t, NFVDi t, IDBit
, CEOit , OCONit , FAGEit , LIQit , LEVit , ROEit , FSIZEit , SECit)  .
The definitions of all this variables are in Appendix; β and
α are vectors of the parameter to be estimated. 𝜂i , 𝜆t and 𝜀it
indicate, respectively, firm-specific effects, specific temporal
effects and an error term.
Sample and data
The sample comprises French firms listed on the SBF 120
from 2006 to 2016. I chose the SBF 120 because prior stud-
ies have tended to focus on large firms to make sure they
have voluntary disclosures. Data are extracted from the
annual reports of the SBF 120. Financial, governance and
voluntary disclosure data are included. The choice of the
sample was based on the availability and recent data. Con-
sistent with other disclosure studies, I have excluded firms
for which there is a lack of data.
A. Tobin’s Q
  Many research studies have claimed that Tobin’s q
is a better proxy to measure firm performance (Li et al.
2018; Tobin 1969). This study defines Tobin q as the
market value of assets scaled by the replacement value
of assets (Li et al. 2018). I will use Tobin’s Q as a proxy
to measure firm performance because it can capture
short- and long-term value and is better than other
accounting measures.
B. Voluntary disclosure index
  In the measurement of VD, I determine a set of
optional information that is disclosed in annual reports
in order to construct a VD index, because there is no
unique measure for VD. In this study, the index is built
based on the studies of Chung et al. (2015) and Boto-
san (1997). The index categorized the elements of VD
into three main categories: timeliness of reporting, dis-
closure of financial forecast and disclosure of annual
report, with a total of 25 items (Chung et al. 2015). All
the items of the index are adjusted with regulation and
reform confirmed (Table 1).
Descriptive statistics
The summary statistics are reported in Table 2. The aver-
age score of voluntary disclosure is 8.33. The TQ ratio var-
ies between companies, with a minimum level of 0.63 and
a maximum level of 1.99. In this sample (1001 observa-
of the total period, with 37% of the period of study after this
change. With regard to CEO duality, 64% of CEOs are also
board chairs, and 36% are not.
Table 3 shows that Tobin’s Q is positively interrelated
with the voluntary disclosure score (SVD). These results
confirm the absence of multicollinearity problems (the
majority of the correlation coefficients are below 80%).
Table 1  Sample
Sample construction Number of firm-
year observa-
tions
Firm sample (2006 to 2016) 1320
Less observing missing 319
Total sample size 1001
The effect of voluntary disclosures and corporate governance on firm value: a study of listed… 173

Table 2  Descriptive statistics
Variable Mean SD Minimum Maximum

T ­Q+1 1.260 0.2879 0.635 1.999

SVD 8.330 1.9773 0 10.84
LEV 0.2597 0.1456 0.0255 0.8171
OCON 13.88% 21.77% 0 90.12%
CEO 0.358 0.4798 0 1
BIN 40.98% 26.01% 0 100%
BSIZ 10.39 4.04 3 23
FCF 0.0156 0.1148 − 2.948 0.4040
LIQ 3.920 1.240 0.333 3.920
SEC 1.835 0.6998 1 3
FSIZE 0.0979 0.0426 0.8310 1.057
FAGE 1.739 0.3700 0.9030 2.545
Variable Frequency Frequency (%)

Law change 0 637 63

1 364 37
CEO 0 592 64
1 331 36

Results
Table 4 displays the regression results of the GMM sys-
tem. I used five models, including the interaction between
the change in law, VD and governance variables. The main
differences in the first models reside in the use of different
interaction governance variables. Model 1 uses one interac-
tion variable related to voluntary disclosures (SVD) and the
variable related to the change in law. Model 2 estimates the
relation between VD and firm value by using OCON*LAW
as an interaction variable. Model 3 focuses on the interac-
tion between CEO duality and the change in law. Model 4
stresses the interaction between independent directors (IDB)
and the change in law (LAW). The pooled model (Model
5) includes all interaction variables at the same time. By
introducing the interaction variables, I aim at testing the
moderating effect of the change in law on the relationships
among voluntary disclosures, CG variables and firm value.
The coefficient of interaction variables increased in
Model 5. Indeed, the repercussions of the corporate gov-
ernance system were strengthened after the promulgation
of the new directives of 2013.
Moreover, the results from Table 4 indicate that the vari-
able SVD is positive and significant in Models 1, 2, 3 and 4.
This finding is consistent with hypothesis 1, which stipulates
that SVD is positively associated with firm value. The VD
of information improves transparency and accountability

Table 3  Correlation matrix
1 2 3 4 5 6 7 8 9 10 11

TQ (1) 1.000
SVD(2) 0.028 1.000
OCON(3) 0.095 0.446 1.000
CEO(4) − 0.034 0.130 − 0.025 1.000
IDB(5) − 0.069 − 0.076 − 0.064 − 0.006 1.000
FCF(6) 0.058 0.001 0.041 0.039 − 0.029 1.000
LEV(7) − 0.156 − 0.123 0.041 − 0.020 − 0.050 − 0.131 1.000
LFSIZE(8) − 0.093 0.061 − 0.030 0.049 − 0.096 0.044 − 0.146 1.000
LNFAGE(9) 0.022 0.137 − 0.001 0.006 0.180 − 0.035 − 0.050 0.192 1.000
SECTOR(10) 0.062 0.104 0.149 0.119 0.037 − 0.027 0.112 − 0.078 − 0.192 1.000
Liquidity(11) 0.017 0.035 − 0.035 − 0.025 0.019 − 0.829 0.005 − 0.049 0.010 0.054 1.000
 S. Assidi
174

Table 4  GMM estimations Model 1 Model 2 Model 3 Model 4 Pooled

for the interactions between
voluntary disclosure, corporate TQ (Lagged) − 0.270*** − 0.269*** − 0.263*** − 0.270*** − 0.190***
governance and firm’s value (0.000) (0.000) (0.000) (0.000) (0.000)
(Tobin’s Q)
SVD 0.122*** 0.139*** 0.104*** 0.115*** 0.282***
(0.000) (0.000) (0.000) (0.000) (0.000)
OCON − 0.471** − 0.478** − 0.558** − 0.493** − 1.268***
(0.025) (0.021) (0.011) (0.020) (0.000)
CEO 0.250*** 0.248*** 0.431*** 0.260*** 0.883***
(0.000) (0.000) (0.000) (0.000) (0.000)
IDB − 0.267*** − 0.268*** − 0.297*** − 0.271*** − 0.165***
(0.000) (0.000) (0.000) (0.000) (0.008)
SVD × LAW 0.270*** − 0.445***
(0.000) (0.000)
OCON × LAW − 0.037*** 1.375***
(0.000) (0.000)
CEO × LAW − 0.296*** − 0.762***
(0.000) (0.000)
IDB × LAW 0.031*** − 0.032
(0.000) (0.687)
FCF − 1.144*** − 1.146*** − 1.159*** − 1.178*** 0.253*
(0.000) (0.000) (0.000) (0.000) (0.077)
LEV − 2.242*** − 2.194*** − 2.572*** − 2.221*** − 2.414***
(0.000) (0.000) (0.000) (0.000) (0.000)
LFSIZE − 4.779 − 6.373* 1.119 − 5.343 − 3.144
(0.144) (0.057) (0.735) (0.103) (0.411)
LNFAGE 0.978 0.986 0.930 0.974 1.301**
(0.122) (0.101) (0.259) (0.122) (0.027)
SECTOR 1.024** 0.955** 1.041** 1.015** 0.119
(0.018) (0.026) (0.021) (0.018) (0.764)
Liquidity − 0.097*** − 0.097*** − 0.098*** − 0.100*** − 0.019
(0.000) (0.000) (0.000) (0.000) (0.120)
Constant 6.056* 7.779** 0.459 6.636** 4.687
(0.067) (0.023) (0.886) (0.044) (0.268)
Hansen test (P value) 68.11 68.03 68.98 68.13 58.56
(0.110) (0.112) (0.097) (0.247)
AR(1) − 3.50*** − 3.60*** − 3.68*** − 3.58*** − 3.70***
(0.000) (0.000) (0.000) (0.000) (0.000)
AR(2) − 1.36 − 0.83 − 1.52 − 1.55 − 1.34
(0.174) (0.408) (0.129) (0.122) (0.152)
Sargan test (p value) 331.22*** 332.51*** 281.09*** 329.44*** 141.57***
(0.000) (0.000) (0.000) (0.000) (0.000)
Number of firms 99 99 99 99

Tobin’s Q is the dependent variable. Standard errors in parentheses. Independent and moderating variables
are mean-centred. All models include year and industry dummies. Correlation 1 (AR1) represents the first-
order correlation, (AR2) represents the second-order autocorrelation of residuals. The Sargan test is the test
of over-identifying restrictions
***p < 0.01; **p < 0.05; *p < 0.10; two-tailed tests

and increases stakeholder confidence. This result corrobo-
rates the findings of Hui and Matsunaga (2014) and Boto-
san (1997). However, the coefficient is negative in Model
5 (pooled). The interaction variable is not significant; this
demonstrates that the new directive does not improve the
quality of voluntary disclosures. The coefficient associated
with CEO × LAW is negative and significant in Models 3
and 5. I conclude that the association between VD and firm
value is stronger in the presence of CEO duality. Hypothesis
2 is confirmed through Model 5. This result means that CEO
duality decreases the firm value. From an agency theory
perspective, many authors have argued that the chairman
should be independent to avoid managerial opportunism
(Jensen 1993). The interaction variable (OCON* LAW) is
negative and significant with TQ (Model 2), signifying that
the concentration decreases the firm’s value. Jouber (2019)
The effect of voluntary disclosures and corporate governance on firm value: a study of listed…
found the same result and claimed that the expropriation of
minority shareholders by majority shareholders negatively
affects the value in the European context. In the same con-
text of ownership concentration and VD, Hoelscher (2019)
claimed that firms with high institutional ownership, which
qualified as poorly governed, voluntary hedging information
voluntarily.
The coefficient of IDB × LAW is positive and significant
in Model 4. The effect of independent directors on firm value
is more effective after the promulgation of the new direc-
tive 2013/34/EU of 26 June 2013. The coefficient of IDB
as a simple variable is negative in Model 4. Thus, the role
of independent directors is altered and meaningful with the
promulgation of the new directive of June 2013. The moni-
toring role of external directors is to enhance the quality
of VD and improve the firm value. The coefficient related
to leverage (LEV) is negative and significant with the firm
value. This result corroborates the theoretical framework
that stipulates that high debt is considered by investors as
a bad sign. Firms with less debt are supposed to be more
profitable (Fama and French 2000). The higher the leverage
levels, the more information managers have to disclose about
firms to reduce the agency cost (Alves et al. 2012).
This study explains the importance of the age variable as
a determinant for financial resources and expertise to help
the firm to disclose the necessary information and reduce the
extra costs. Firm size (FSIZE) has a negative and significant
coefficient in Model 2. Size can be explained by the politi-
cal costs exercised on the firm. Indeed, large firms try to
reduce the political costs by using a strategy of disclosing
more voluntary information (Aljifri et al., 2014; Camffer-
man and Cooke 2002; Watts and Zimmerman 1990). Alves
et al. (2012)argued that large firms are more engaged in VD.
The SECTOR variable is significant in the four models. The
sector is very important in the firms’ disclosure strategy, and
the industry shapes the corporate reporting culture (Inchausti
1997; Wallace et al. 1994). The liquidity variable (LIQ) is
also significant. Liquidity is controlled in the framework of
signalling theory; Owusu-Ansah and Yeoh (2005) recom-
mend that a firm’s liquidity influences the firm’s value and
the practices of mandatory disclosure.
The robustness of the model’s results is based on the
validity of the specification tests, mainly the Sargan instru-
ment validity test and the second-order autocorrelation test.
The results shown in Table 4 confirm these conditions in five
regressions. The Sargan test does not reject the null hypoth-
esis of over-identification of the model, which validates the
quality of the instruments. Regarding autocorrelation, the
tests do not reject the hypothesis of no second order in the
five regressions. This legitimizes the estimation of the first
difference equation under the independence hypothesis of
initial perturbations. Thus, the specification tests validate
the statistical completeness of the empirical model, which
175
allows the interpretation of the coefficients of the explana-
tory variables.
Robustness tests
To analyse the sensitivity of the results, I subdivided the
sample into three sub-groups categorized by the sector of
activity of each firm: industry, goods and services, and other
sectors. I re-estimated the estimates for these three sub-
groups and found no significant differences based on sector.
Indeed, the result shows that VD is associated positively and
significantly with the firm. The OCON variable has the same
negative sign except for the industrial sector. The variation
of the significant results by sector in different variables is
explained by the specificity of each sector (see Table 5).
Finally, the results corroborate the theoretical hypotheses.
The econometric results confirm that voluntary disclosure
increases the firm’s performance. The sign of the interaction
variable SDV*LAW is positive for all sectors; the industry
sector has the highest coefficient. Ownership concentration
(OCON) is more relevant in sectors 2 and 3. CEO dual-
ity reduces firm value for the industry sector. However, it
has no significant effect on other sectors. Regarding the
IDB variable, it has the same negative sign as presented in
Table 4. The IDB*LAW variable is positive for sectors 2 and
3. Independent directors improve the quality and level of
VD. Zhang (2019) confirmed the pertinent role of corporate
governance, concluding that high VD on social responsibil-
ity along with effective corporate governance together affect
the financial performance of firms.
Conclusions
In this study, I examined the effect of VD and CG moderated
by a change in law (2013) on the firm’s value. The theo-
retical framework was built on the assumptions of agency
theory and positive accounting theory. To test the theoretical
hypotheses, I used a large sample of 1001 observations of
French listed firms over the period 2006–2016. The empiri-
cal analysis included univariate results and the GMM system
estimator method to avoid the estimation problems induced
by endogeneity of corporate governance.
The findings of this study bring new evidence into
the relationship between VD polices and firm value. In
particular, a positive and strong significant association
between VD and firm value is explained by considera-
ble evidence showing that firms with low protection of
shareholder rights exhibit discretionary VD to increase
firm value. Furthermore, this result is explained by the
importance of VD to reduce information asymmetry and
increase firm value. Additionally, the promulgation of the
 S. Assidi
176

Table 5  System GMM Sector 1 Sector 2 Sector 3 Pooled

estimation of Tobin’s Q, sector1
(industry), sector2 (goods and TQ (Lagged) − 0.525*** − 0.163*** − 0.752* − 0.168***
services) and sector 3 (other (0.007) (0.009) (0.051) (0.000)
sectors)
SVD 0.786** 0.587*** 0.37** 0.293***
(0.017) (0.000) (0.030) (0.000)
OCON 0.438 − 3.539*** − 4.818*** − 1.219***
(0.115) (0.000) (0.002) (0.000)
CEO − 0.827*** 0.033 0.272 0.868***
(0.002) (0.771) (0.831) (0.000)
IDB − 0.356** − 0.438*** − 0.909*** − 0.148**
(0.010) (0.000) (0.005) (0.016)
SVD × LAW 0.440** − 1.501*** 2.542** 0.474***
(0.041) (0.000) (0.010) (0.000)
OCON × LAW − 1.020** 2.493*** 2.081** 1.463***
(0.021) (0.000) (0.010) (0.000)
CEO × LAW 0.011 0.087 0.017 − 0.732***
(0.898) (0.628) 0.891 (0.000)
IDB × LAW − 0.106 0.544*** 0.855* − 0.044
(0.184) (0.002) (0.077) (0.555)
FCF 2.013*** 1.075 1.669 − 0.078
(0.008) (0.110) (0.503) (0.597)
LEV − 4.363 − 0.477 − 1.053 − 2.454***
(0.000) (0.657) (0.586) (0.000)
LFSIZE − 2.373 2.032*** 1.898 − 3.224
(0.282) (0.000) (0.556) (0.324)
LNFAGE 1.294*** − 2.571* − 3.982** 1.242**
(0.004) (0.050) (0.014) (0.026)
Liquidity − 0.968 − 0.046 − 0.012 − 0.011
0.427 (0.827) (0.119) (0.742)
Constant 3.038** 4.865*** 5.230** 4.928
(0.041) (0.004) (0.017) (0.143)
Hansen test (P value) 14.42 34.14 77.18 70.58
(0.637) (0.691) (0.185) (0.144)
AR(1) − 1.65 − 2.10 − 4.14 − 1.86
(0.099) (0.036) (0.000) (0.063)
AR(2) − 0.83 − 1.36 − 0. 39 − 1.55
(0.408) (0.174) (0.698) (0.122)
Sargan test (p value) 13.84 103.11 133.83 202.72
(0.679) (0.000) (0.000) (0.000)
Number of firms 29 43 19 91

***p < 0.01; **p < 0.05; *p < 0.10; two-tailed tests

The effect of voluntary disclosures and corporate governance on firm value: a study of listed… 177

new directive 2013/34/EU has improved the quality and
the volume of voluntary disclosure.
The French context is characterized by an insider sys-
tem of corporate governance. The ownership concentra-
tion is high, and it decreases the firm’s value because the
majority shareholders expropriate the minority sharehold-
ers. Independent directors and CEO duality moderated by
the change in law have had a significant effect on firm
value.
These findings add insights to the growing literature on
VD polices by demonstrating that firms have to formulate
and implement a strategy of increasing the VD of income
to optimize their wealth. Our results reveal that compre-
hensive VD reduces gaps between manager and shareholder
interests. The empirical findings in this study provide a new
understanding that articulates that VD practices and their
relationship with good corporate governance create transpar-
ency and enhance trust between firms and their environment.
These results also have practical relevance, in that the EU
legislature needs to diagnose the effects of the change in law
and the promulgation of new directives on voluntary disclo-
sure and on corporate governance mechanisms. Regulations
regarding independent directors and CEO duality must be
revised continuously to ensure more transparency.
The results of this study offer guidelines for future prac-
tice. For this reason, firms must comply with the law and
disclose more information related to the environment and
society because of their importance in the economic cycle
and to help firms achieve sustainability goals.
This study lays the groundwork for future research into
the topic of voluntary disclosure by exploring the new index
on the interactions between corporate social responsibility
CSR and the social performance of firms. Further, the study
of the improvement in the laws of governance attributes and
the obligation of firms to publish other information is neces-
sary for investors and the public in general.
Compliance with ethical standards 
Conflict of interest  Author states that he has no conflict of interest to
declare.
Appendix
See Table 6.

Table 6  Definition of variables
Variable Symbol Measurement

Tobin’s Q TQ The market value of assets scaled by the replacement value of assets
Score voluntary disclosure SVD Score of voluntary disclosure of Chung et al. (2015), Chung et al. (2015).
Independent directors IDB Percentage (%) of the independent directors Board
Board size BSIZ Number of border in firms
COE duality CEO Dummy variable, 1 if the chairman is also CEO and 0 otherwise
Ownership concentration OCON Percentage of shares held by the large shareholders
Free cash flow FCF Free cash flow is the cash a company produces through its operations, less the cost of
expenditures on assets
Age of firm FAGE Log of the age of firm
Liquidity LIQ The ratio of liquidity to owners’ equity
Leverage LEV Long-Term Debt divided by total Assets
Size of firm FSIZE The natural logarithm of total Assets
Sector SEC Industry sector1; goods and services sector 2, other sector 3, excludes financial firms about
this study
Change of law Law Dummy variable, 1 if the period post 2013 and 0 otherwise
 S. Assidi
178

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