EVALUATING THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND VOLUNTARY DISCLOSURE IN LEVEL AUTOMOTIVE AND MANUFACTURING INDUSTRIES, BASIC METALS AND FOOD AND PHARMACEUTICAL PRODUCTS

Corporate governance consists of the relations between shareholders, managers, auditors, and other interested parties that ensures establishment of a control system in order to respect rights of minority shareholders and correctly implement assembly resolutions and also prevent possible abuses. Corporate governance mechanisms ensure the interests of shareholders, creditors, customers and other interested parties which are established through optimal decisions of executive committees and compiling the compulsory rules and regulations. All these serve four purposes: accountability, clarity, justice and respecting the rights of interested parties. The present study evaluated the effects of mechanisms of corporate governance on voluntary disclosure of information in Automotive and manufacturing industries, Basic metals and food and pharmaceutical productsfor a period of eight years from 2002 to 2009. Independent variables used here are corporate governance mechanisms including indirect directors (ID), ownership centralization (OC), institutional ownership (IO), free float (FF), and auditor type (AT). The dependent variable is voluntary disclosure (VD) of information in companies which is obtained, according to Jensen index, by the ratio of voluntary disclosure of corporate information divided by total amount of voluntary disclosure (62 cases). Control variables include corporate value, obtained from natural logarithm of sales, and financial leverage which is obtained by long-term debts divided by total assets at the end of each financial year. Overall, results of the study showed a significant relation between all of the mechanisms indirect directors’ ratio, ownership centralization, institutional ownership, free float with voluntary disclosure of information, but no significant relation between auditor type –with voluntary disclosure was observed in the industry during the study.