Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies
This study addresses an underexplored aspect of disclosure literature by examining how institutional investor heterogeneity – specifically foreign institutional investors (FII) and domestic institutional investors (DII) – influences contingent liabilities disclosure (CLD) in India. Drawing on agen...
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Nicolaus Copernicus University in Toruń
2025-06-01
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| Series: | Copernican Journal of Finance & Accounting |
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| Online Access: | https://apcz.umk.pl/CJFA/article/view/63111 |
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| author | Srikanth Potharla |
| author_facet | Srikanth Potharla |
| author_sort | Srikanth Potharla |
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This study addresses an underexplored aspect of disclosure literature by examining how institutional investor heterogeneity – specifically foreign institutional investors (FII) and domestic institutional investors (DII) – influences contingent liabilities disclosure (CLD) in India. Drawing on agency, stakeholder, and resource dependence theories, this research analyzes how institutional investors reduce information asymmetry and enhance corporate transparency. Using data from 430 listed Indian firms spanning 5,483 firm-year observations (2006–2023), regression analysis is employed to assess the differential impacts of FII and DII on CLD, while controlling for firm-specific and sectoral variables. The results demonstrate that institutional ownership significantly enhances CLD, with FII exerting a notably stronger influence compared to DII. Larger firms exhibit higher disclosure levels due to increased scrutiny, whereas growth-oriented firms tend to limit disclosure strategically to protect competitive advantages. Sectoral analysis reveals stricter compliance in Basic Materials and Consumer Non-Cyclicals industries, with comparatively lower disclosure in the Financial and Technology sectors. The study contributes theoretically by highlighting institutional investors' multifaceted roles as governance agents, stakeholder representatives, and crucial capital providers. These findings offer timely insights for regulators and corporate leaders seeking to improve transparency standards and attract global investment through enhanced disclosure policies.
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| format | Article |
| id | doaj-art-dafd3bdc19744311acc07b3f32a3dba8 |
| institution | Kabale University |
| issn | 2300-1240 2300-3065 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Nicolaus Copernicus University in Toruń |
| record_format | Article |
| series | Copernican Journal of Finance & Accounting |
| spelling | doaj-art-dafd3bdc19744311acc07b3f32a3dba82025-08-20T03:29:18ZengNicolaus Copernicus University in ToruńCopernican Journal of Finance & Accounting2300-12402300-30652025-06-01141Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed CompaniesSrikanth Potharla0https://orcid.org/0000-0003-3176-9675ICFAI Business School, IFHE, Hyderabad This study addresses an underexplored aspect of disclosure literature by examining how institutional investor heterogeneity – specifically foreign institutional investors (FII) and domestic institutional investors (DII) – influences contingent liabilities disclosure (CLD) in India. Drawing on agency, stakeholder, and resource dependence theories, this research analyzes how institutional investors reduce information asymmetry and enhance corporate transparency. Using data from 430 listed Indian firms spanning 5,483 firm-year observations (2006–2023), regression analysis is employed to assess the differential impacts of FII and DII on CLD, while controlling for firm-specific and sectoral variables. The results demonstrate that institutional ownership significantly enhances CLD, with FII exerting a notably stronger influence compared to DII. Larger firms exhibit higher disclosure levels due to increased scrutiny, whereas growth-oriented firms tend to limit disclosure strategically to protect competitive advantages. Sectoral analysis reveals stricter compliance in Basic Materials and Consumer Non-Cyclicals industries, with comparatively lower disclosure in the Financial and Technology sectors. The study contributes theoretically by highlighting institutional investors' multifaceted roles as governance agents, stakeholder representatives, and crucial capital providers. These findings offer timely insights for regulators and corporate leaders seeking to improve transparency standards and attract global investment through enhanced disclosure policies. https://apcz.umk.pl/CJFA/article/view/63111contingent liabilities disclosureinstitutional ownershipagency theoryemerging marketscorporate transparency |
| spellingShingle | Srikanth Potharla Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies Copernican Journal of Finance & Accounting contingent liabilities disclosure institutional ownership agency theory emerging markets corporate transparency |
| title | Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies |
| title_full | Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies |
| title_fullStr | Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies |
| title_full_unstemmed | Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies |
| title_short | Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies |
| title_sort | bridging disclosure gaps the role of institutional investors in contingent liabilities reporting by indian listed companies |
| topic | contingent liabilities disclosure institutional ownership agency theory emerging markets corporate transparency |
| url | https://apcz.umk.pl/CJFA/article/view/63111 |
| work_keys_str_mv | AT srikanthpotharla bridgingdisclosuregapstheroleofinstitutionalinvestorsincontingentliabilitiesreportingbyindianlistedcompanies |