Factors influencing corporate governance disclosure of companies listed on the Alternative Exchange (AltX) in South Africa

Abstract

This article examines the various factors that influence the level of conformance with corporate governance recommendations for companies listed on the Alternative Exchange (AltX) in South Africa. To achieve this objective, a corporate governance disclosure index was developed by examining the extent to which AltX companies apply the corporate governance recommendations as set out in King II and King III. The corporate governance disclosure index was then regressed on a number of corporate governance and firm characteristics to determine the influence of various factors on the level of conformance with corporate governance recommendations. It was found that larger companies, where the CEO and chairman of the board are separate, companies with an independent audit committee and companies with higher debt levels are more likely to conform to corporate governance recommendations. There is no evidence that levels of corporate governance conformance are influenced by the growth and profitability of companies, or by corporate governance characteristics, such as the independence of the board.

Keywords:

• Corporate Governance
• Agency Theory
• Small Companies
• Boards of Directors
• Independence of the Board

Disclosure statement

No potential conflict of interest was reported by the authors.