The effectiveness of board of directors’ characteristics in mandatory disclosure compliance

Purpose The purpose of this paper is to investigate the relationship between the characteristics of the board of directors and mandatory disclosure compliance (measured by International Financial Reporting Standards requirements) in firms listed on the Kuwait Stock Exchange (KSE) in 2010. Design/methodology/approach Several characteristics are used to assess the effectiveness of the board of directors: number of members, gender diversity, CEO duality, multiple directorships, the proportion of family members on the board and the presence of a member of the ruling family of Kuwait. Mandatory disclosure compliance is measured using a self-constructed, item-based index. A regression model tested the paper’s hypotheses. Findings After controlling for firm-specific characteristics, it was found that board size, gender diversity and multiple directorships were positively correlated with compliance, while CEO duality and the proportion of family members on the board were negatively correlated with compliance. Research limitations/implications Potential limitations stem from both the nature of the sample and the dataset. The small sample reflects the size of the KSE and the limited timeframe (a one-year period). Nevertheless, this paper provides some interesting insights. A longitudinal study would provide more comprehensive insights into the relationship between the characteristics of the board of directors and mandatory disclosure compliance over time. Practical implications The findings highlight the effectiveness of board of directors’ characteristics in promoting mandatory accounting compliance. As disclosure is fundamental for the effective functioning of capital markets and sound investments, a direct implication is that the quality of financial reporting can be improved by taking these characteristics into account. Originality/value The paper contributes to the literature on the determinants of mandatory accounting compliance. The findings highlight the importance of the board of directors’ role in enhancing transparency and ensuring the quality of financial reporting. The findings will be particularly valuable to those involved in the appointment of directors, who should be aware of the influence of the configuration and characteristics of the board on compliance.