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Influence of Fundamental Variables on Corporate Disclosure via Modified Entropy

§ Department of Accounting, Faculty of Economic and Ac...
‡ Graduate school of business University Tun Abdul Razak.

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Influence of Fundamental Variables on Corporate Disclosure via Modified Entropy

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Abstract

The use of disclosure index to quantify disclosure level had been widely used in previous studies related to disclosure determinates and disclosure effects. Disclosure indexes rely on totalling items disclosed in an information channel may offer a greater picture about the quantity of information disclosed but little on the quality level, especially when considering that items disclosed may not be consistent from one year to another.The aim of this paper is to introduce an alternative approach to quantify disclosure level through probabilistic measure derived from entropy, named Modified entropy score (MES). A measure which combines both items disclosed and their probability to capture the quality of information disclosed. The introduced measure was compared with previous measure, conventional disclosure score (CDS). The results showed great consistency between the two measures. Disclosure level as measured by both CDS and MES was influenced positively by several firms’ fundamental variables including size, age, liquidity and profitability while ownership dispersion showed insignificant effect on disclosure level.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Fouzi Ali Mukhtar, Ravindran Ramasamy. . "Influence of Fundamental Variables on Corporate Disclosure via Modified Entropy". Global Journal of Human-Social Science - H: Interdisciplinary GJHSS-H Volume 13 (GJHSS Volume 13 Issue 21 (H1)).

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Journal Specifications

Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

Keywords
Classification
GJHSS-H Classification FOR Code: 150303
Version of record
v1.2

Issue date
May 20, 2013

Language
English
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Influence of Fundamental Variables on Corporate Disclosure via Modified Entropy

Fouzi Mukhtar
Fouzi Mukhtar
Ravindran Ramasamy
Ravindran Ramasamy