Are all outside directors created equal with respect to firm disclosure policy?

  • Luminita EnacheEmail author
  • Antonio Parbonetti
  • Anup Srivastava
Original Research


Empirical evidence on the association between outside directors and firms’ voluntary disclosures is mixed and controversial. We hypothesize that the outside directors do not represent a homogeneous group of people as considered in the literature. Using hand-collected data from a sample of biotechnology firms, we find that the aforesaid association differs based on the directors’ professional backgrounds. Our results are consistent with two ideas. First, an outside director’s influence on firm disclosure policy is shaped by her professional background. Second, firms match outside directors’ professional backgrounds with their disclosure policy. We cannot distinguish between the two explanations. Yet, we make an important contribution to the literature. We show that the impact and the selection prospects of outside directors are not as uniform as previously considered in the literature. Thus, the researchers examining financial disclosures must take into account the background characteristics of all outside directors, not just of those in the audit committee. And investor bodies must consider the background characteristics of candidates in their recommendation for outside-director selection.


Biotechnology firms Corporate governance Voluntary disclosures Proprietary costs Outside directors 

JEL Classification

M40 M41 G14 G32 G34 



This paper is based on one of the three essays for the completion of Enache’s doctoral dissertation at University of Padua. We thank the editor, Cheng-Few Lee, two anonymous reviewers, Vasiliki Athanasakou, David Emanuel, Fabrizio Ferri, Ferdinand Gul, Igor Goncharov, Jae B. Kim, Paul Laux, Baruch Lev, Brian Rountree, Seyed Mehdian, Stephen Penman, Raffaela Santolini, Ana Simpson, Tony van Zijl, Anne Wyatt, Hila Fogel-Yaari and seminar participants at the 2018 Hawaii Accounting Research Conference, 2012 American Accounting Association annual meeting, 36th European Accounting Association Annual Meeting, 2013 Accounting and Finance Conference, Ninth Workshop on Corporate Governance, University of Michigan—Flint, Victoria University of Wellington, London School of Economics, Massey University, University of Padua, University of Calgary and Eighth Workshop on Visualising, Measuring Intangibles, and Intellectual Capital for their very valuable comments. This paper received the 2012 European Institute for Advanced Studies in Management Best Junior Contribution to Intangibles Literature Theory and Practice Award—Mention d’Honeur. Enache and Srivastava acknowledge funding received from Social Sciences and Humanities Research Council for the project “Final Disclosure and Corporate Governance.” Enache also acknowledges funding received from Social Sciences and Humanities Research Council for the project “Board Composition and Financial Analysts’ Earnings Forecasts in the Biotech Sector.” In addition, Srivastava acknowledges the financial support from Daniel R. Revers T’89 Faculty Fellowship at Tuck School of Business, Dartmouth College, Canada Research Chair program of the Government of Canada, and Haskayne School of Business, University of Calgary. We are thankful to authors of Enache and Hussainey (2019) for sharing data on disclosure index.


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© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Haskayne School of BusinessUniversity of CalgaryCalgaryCanada
  2. 2.Department of Economics and ManagementUniversity of PaduaPaduaItaly

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