Abstract:
Purpose – The study aims to seeks to ascertain the impact of corporate disclosure on foreign equity
ownership. Corporate disclosures are important to for stock markets because it is an activity that
mitigates information differences between company insiders and outsiders.
Design/methodology/approach – Corporate disclosures assume an even greater important when
company outsiders are not domiciled in the same country as the company and the company insiders. In
this study, the relation between foreign share ownership and corporate disclosures using data on
Ghana, Kenya and Nigeria is examined.
Findings – The consistent results in this study are that foreign share ownership is positively related to
firm size. A negative relation, however, between foreign share ownership and corporate disclosure is
found, but this turns out to be related to disclosures about ownership, while disclosures on financial
reporting and board management have a positive and insignificant statistical relation taking into
account unobserved country, time and firm effects. Further analysis shows that corporate disclosures
are very persistent and negatively related to lag foreign share ownership. No consistent statistical
relation is found between disclosure and market-to-book values as a proxy for investment
opportunities. It is recommended to African-listed firms to pursue adoption of high-quality financial
reporting standards and to increase their reporting on board management. The study also recommends
that the African Government weighs the benefits of detailed ownership disclosures.
Originality/value – The study utilises frontier market data to complement existing literature on how
corporate disclosure and transparency influences foreign investors decision to invest in Africa.
