A STUDY OF THE RELATION BETWEEN CORPORATE DISCLOSURE PRACTICES AND FIRM PERFORMANCE OF SELECTED INDIAN COMPANIES

Abstract

This paper explores the correlation between corporate disclosure and firm performance based on evidence provided on the 15 sampled companies operating in the Automobile, FMCG, and Telecommunication industries during the five-year period (2018-19 to 2022-23). To gauge how much a company is transparent, a Disclosure Transparency Index (DTI) was created in which there are 40 compulsory and voluntary disclosures. Annual reports, SEBI filings, BRSR reports, and established financial databases were chosen as a source of secondary data to extract the required data, which constituted a strong panel dataset. The findings support a significant positive change in the disclosure practices over the period in study and this has been attributed to changing regulation regulations especially those in the LODR amendments of the SEBI and the implementation of BRSR regulations. Comparisons in terms of industry have shown that FMCG companies always show the highest level of transparency whilst telecommunication companies show the lowest. Correlation analysis indicates that there are strong positive correlations between DTI and key “performance indicators like ROCE (0.61), NPR (0.53) and Market Capitalization (0.67). The regression analysis also supports the fact that disclosure transparency has a significant positive improvement in financial and market performance even after the firm size, leverage, liquidity, and age factors are considered. This highlights the key findings of the study, that corporate transparency is not simply a regulatory requirement but a strategic factor of profitability, efficiency of operations and investor valuation. The study is significant to the body of literature on corporate governance by providing empirical data to support the claim that better disclosure practices can reinforce the firm performance and increase the long-term competitiveness of the Indian business climate.