Abstract:
Stakeholder's demands for transparent information have created a challenging disclosure environment for listed companies in Sri Lanka. Therefore the voluntary
disclosure (VD) practices in Sri Lanka have changed dramatically over the last decades'
The purpose of this study is to expand the understanding of impact of voluntary
disclosure on financial performance of listed companies in Sri Lanka. Although a few
studies have been undertaken in Sri Lanka, this study provides new insights about VD
in Sri Lankan context. By reviewing2g0 companies' annual report published in recent
year. Out of them, 4lo/o of (119) companies were selected as sample for this study.
Company annual reports from 2017 for independent variables and from 2018 for
dependent variables were scrutinized for find the VD and financial performance Forward-looking information disclosure, general, corporate and strategic information
disclosure, intellectual capital information disclosure and socio-environmental and
board information disclosure are identified as independent variables financial
performance identified as dependent variable for this study.
VD weighted score cording framework was obtained using content analysis of reports
of the companies on various component of voluntary disclosure as reported in their
annual financial reports. This study employed Return on Assets (ROA) to identify the
financial performance. Descriptive Statistics, Frequency Analysis, Pearson Correlation,
Simple Regression Analysis and Multiple Regression analysis were used to analyze the
data. The study demonstrated that although the level of voluntary disclosure in Sri
Lankan listed companies is lower. However, it is acceptable compared to other similar
countries. The finding indicated that a statistically significant moderate positive
relationship between voluntary disclosure and financial performance which measure in
Return on Assets. Moreover, this study has identified that all voluntary disclosure
categories such as Forward-looking information disclosure, general corporate and
strategic information disclosure, intellectual capital information disclosure and socio-environmental and board information disclosure have significant positive impact on
financial performance (ROA). The finding from this research could provide relevant
insights to the Sri Lankan listed companies.