Director Ownership and Voluntary Segment Disclosure: Hong Kong Evidence


Corresponding author: Sidney Leung, Department of Accountancy, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong.


Weakness of corporate governance and lack of transparency are often considered causes of or contributors to the Asian Financial Crisis. Publicly listed companies in Hong Kong, like other Asian firms, have concentrated director ownership. The study uses voluntary segment disclosure above the benchmark minimum as a proxy for transparency and examines its relationship to the ownership structure and composition of corporate boards in Hong Kong. We find that: (1) high (concentrated) board ownership explains the extent of low voluntary segment disclosure and this negative relationship is stronger when firm performance is very poor; (2) the contribution of non-executive directors to enhance voluntary segment disclosure is effective for firms with low director ownership but not for concentrated-ownership firms. These results have implications for policy makers and regulators in the Asia-Pacific region striving to improve governance and transparency.