An assessment of Information disclosures by Pharmaceutical Industry: Evidence from India


  • Rupali Khanna Chandigarh University
  • Bhupinder Pal Singh Chahal Chandigarh University



Disclosure, Volatility, pharma listed companies


The information disclosed by the companies in their annual reports reveals much about company’s performance and prospects. Investors take the information as base for decision for investment. Under such circumstance, companies choose to disclose beyond what is mandatorily required. Theories like agency theory, capital need theory and signaling theory support the need of voluntary disclosure. This study is about investigating the extent of Voluntary disclosure in pharmaceutical sector of India which is 3rd in World in terms of Volume of Trade.

Objective: To investigate the extent of voluntary disclosure practices prevailing in pharma sector of India, for the year 2010-11 to 2017-18.

Significance of the study: This study aims to explore the corporate aspect of pharmaceutical sector. Any growing avenue is a potential opportunity for investors looking for parking their money to get adequate returns. Thus, Indian Pharma sector has come up in flying colors as an avenue for investors to place their money owing to its 100% FDI . Investors have been looking for more and more information from this sector to ensure the safety of funds. Thus the extent of disclosures is worth studying to place a suggestion for the policymakers to introduce the changes in the present set of disclosure practices in pharmaceutical sector.

Research Methodology: To understand the extent of voluntary disclosure, a disclosure checklist is constructed and descriptive statistics are carved out to reach the results. The checklist consists of 55 items which are not mandatory by law. The checklist is based on dichotomous scale of ‘1’ and ‘0’ representing presence and absence of the checklist item respectively. The cross sectional analysis is carried out to investigate the year wise and company wise disclosure for eight years.

Findings: Though the study observes an increasing trends in the disclosure scores, but the findings are alarming to state that the highest score attained by any company throughout the period of 8 years was 37 (out of 55) not even meeting 80% of the total checklist score. This shows that pharmaceutical sector is not so friendly at disclosures. The probable reasons for such startling results are discussed in the study.


Download data is not yet available.


Accounting, F. (2014). Voluntary disclosure frequency and cost of debt : an analysis in the Tunisian context Dorra Talbi * Mohamed Ali Omri, 6(2).

Adam, T., and V. K. Goyal. "The Investment Opportunity Set and Its Proxy Variables." Journal of Financial Research 31.1 (2008): 41. Print.

Agarwal, S. P., Monem, R. M., & Ariff, M. (1996). Price to Book Ratio as a Valuation Model: An Empirical Investigation. Finance India, 10(2), 333-344.

AICPA (1994), "Improving Business Reporting-a Customer Focus:Meeting the Information Needs of Investors and Creditors", Comprehensive Report of the Special Committee on Financial Reporting (the Jenkins report),

Barry, c., and s. Brown. "Differential Information and Security Market Equilibrium." Journal of Financial and Quantitative Analysis 20 (1985): 407-422.

Baumann, U., and E. Nier. 2003. "Market Discipline, Disclosure, and Moral Hazard in Banking." In Proceedings of the 2003 Conference on Bank Structure and Competition. Chicago: Federal Reserve Bank of Chicago

Bertomeu, J., Beyer, A., & Dye, R. A. (2011). Capital structure, cost of capital, and voluntary disclosures. Accounting Review, 86(3), 857-886.

Buzby, S.L. (1974a), "The Nature of Adequate Disclosure", Journal of Accountancy, April, pp. 3 8-47. Buzby, S.L. (1974b), "Selected Items of Information and their Disclosure in Annual Reports", Accounting Review, Vol. XLIX NO. 3 July, PP. 423-43 5. Buzby, S.L. (1975a), "The Boundaries of Adequate Disclosure", The Singapore Accountant, Vol. 10, pp. 83-91.

Botosan, C.A. (1997). Disclosure level and the cost of equity capital, Accounting Review, 72, pp. 323-350. Botosan, C.A. (2006). Disclosure and the cost of capital: What do we know? Accounting and Business Research, International Accounting Policy Forum, pp. 31-40.

Botosan, C.A. and M.A. Plumlee (2002), A Re-examination of Disclosure Level and the Expected Cost of Equity Capital, Journal of Accounting Research, vol. 40 (1), pp. 21-40.

Cooke, T. E. (1989). Voluntary Corporate Disclosure by Swedish Companies. Journal of International Financial Management & Accounting, 1(2), 171-195.

Campbell, D., Shrives, P., & Saager, H.B. (2001). Voluntary disclosure of mission statements in corporate annual reports: signaling what and to whom?, Business and Society Review, 106(1), pp. 65-87.

Cheynel, E. (2013). A theory of voluntary disclosure and cost of capital. Review of Accounting Studies, 18(4), 987-1020.

Choi, F.D.S. (1973). Financial disclosure and entry to the European capital market, Journal of Accounting Research, 11(2), pp. 159-175.

David, P., J. P. O'Brien, and T. Yoshikawa. "The Implications of Debt Heterogeneity for R&D Investment and Firm Performance." The Academy of Management Journal 51.1 (2008): 165-81. Print

Determination of the weighted average cost of capital of UPC and. (2009), (October).

Diamond, D., & Verrecchia, R. (1991). Disclosure, liquidity, and the cost of capital, The Journal of Finance, 46(4), pp. 1325-1355.

Forker, J. J. (1992), "Corporate Governance and Disclosure Quality", Accounting and Business Research, Vol. 22, No. 86, Spring, pp. 111-124.

Francis, J., Nanda, D., & Olsson, P. (2008). Voluntary disclosure, earnings quality, and cost of capital. Journal of Accounting Research, 46(1), 53-99.

Gray, S. J. with McSweeney, L. B. and Shaw, J. C. (1984), Information Disclosure and the Multinational Corporation, Chichester: John Wiley & Sons, Inc.

Gelb David.S; Paul Zarowin (2002) "Corporate Disclosure Policy and the Informativeness of Stock Prices Review of Accounting Studies"; Mar 2002; ABI/INFORM Global pg. 33

Haggard, K. S., Martin, X., & Pereira, R. (2008). Stock Price Informativeness ? Financial Management, 747-768.

Hail, L., C. Leuz (2007), Capital Market Effect of Mandatory IFRS Reporting in the EU: Empirical Evidence,

Hassan Omaima A.G, Peter Romilly, Gianluigi Giorgioni, David Power : The value relevance of disclosure: Evidence from the emerging capital market of Egypt

The International Journal of Accounting, Volume 44, Issue 1, Pages 79-102

Healy, Paul M. and Palepu, Krishna, Information Asymmetry, Corporate Disclosure and the Capital Markets: A Review of the Empirical Disclosure Literature (December 2000). JAE Rochester Conference April 2000.

Ibrahim, K. (2014). Firm Characteristics and Voluntary Segments Disclosure among the Largest Firms in Nigeria. International Journal of Trade, Economics and Finance, 5(4), 327-331.

Jensen, M.C., & Meckling, W.H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure, Journal of Financial Economics, 3(4), pp. 305-360.

Kristandl, G., & Bontis, N. (2007). The impact of voluntary disclosure on cost of equity capital estimates in a temporal setting. Journal of Intellectual Capital, 8(4), 577-594.

Lang, M., & Lundholm, R. (1993). Cross-sectional determinants of analyst ratings of corporate disclosures, Journal of Accounting Research, 31(2), pp. 246-271.

Lang, M., & Lundholm, R. (1996). Corporate disclosure policy and analysts behaviour, The Accounting Review, 71, pp. 467-492.

Lang, H.L., R.J. Lundholm (2000), Voluntary Disclosure and Equity Offerings: Reducing Information Assymetry or Hyping the Stock, Contemporary Accounting Research, vol. 17 (4), pp. 623-662.

Leuz, c., and Verrecchia (2000) "The Economic Consequences of Increased Disclosure." Journal of Accounting Research (2000): 91-124.

Lindblom, C.K. (1994). The implications of organizational legitimacy for corporate social performance and disclosure, Critical Perspectives on Accounting Conference. New York.

Magness, V. (2006). Strategic posture, financial performance and environmental disclosure: an empirical test of legitimacy theory, Accounting, Auditing and Accountability Journal, 19(4), pp. 540-563.

Mangala, D. (2015). Disclosure through Annual Reports: A Study of Indian Corporate Sector. International Journal of Research in Management, Science & Technology, 3(2), 2321-3264. Retrieved from

Mathew James (1999), "Perception about the Need for Innovations in Financial Reporting: A Survey", the Management Accountant, (May), pp. 373-375.

Meek, G. K. and Gray, S. J. (1989), "Globalisation of Stock Market and Foreign Listing Requirement: Voluntary Disclosures by Continental European Companies Listed on the London Stock Exchange", Journal of International Business Studies, Vol. 20(2).

Palepu K.G., P.M. Healy and V.L. Bernard (2004), Business Analysis and Valuation: Using Financial Statements, Mason, Thomson South Western

Pankaj M Madhani (2008) "New Models for Financial Reporting in the 21st Century" in Corporate Disclosure: Concepts and Practices, The Icfai University Press

Petrova, E., Georgakopoulos, G., Sotiropoulos, I., & Vasileiou, K. Z. (2012). Relationship between Cost of Equity Capital and Voluntary Corporate Disclosures. International Journal of Economics and Finance, 4(3), 83-96.

Ross, S.A. (1977). The determination of financial structure: the incentive signaling approach, Bell Journal of Economics, 8(1), pp. 23-40.

Shahriari, M., Mesbahi, L., & Saeedi, S. M. (2015). Risk Free Rate in the Context of Indian Market (Vol. 1). Retrieved from www.ijariie.com547

Schutter P. and V.O Connell (2006) "The Trend Toward Voluntary Corporate Disclosures" Management Accounting Quarterly, 7, no. 2 (Winter) 1-9.

Shankar Tilak, "Making Corporate Reporting Practices More Communicative", Economic and Political Weekly, November 1972, pp.164-168.

Singh, D.R. and Gupta, B.N., "Corporate financial disclosure in Indian Companies," Indian journal of Accounting (June and December 1977), pp. 21-37

Singhvi, S. S. (1972), "Corporate Management's Inclination to Disclose Financial Information", Financial Analyst's Journal, July-August, pp. 66-73. Solomons, D. (1989), Guidelines for Financial Reporting Standards, London: The Institute of Chartered Accountants in England and Wales.

Spero, L. L. (1979), The Extent and Causes of Voluntary Disclosure of Financial Information in Three European Capital Markets: An Exploratory Study, Unpublished Doctoral Dissertation, Harvard University.

Spence, M. (1973). Job market signalling, Quarterly Journal of Economics, 87(3), pp. 355-374.

Verrecchia, R.(1990) "Information Quality and Discretionary Disclosure." Journal of Accounting and Economics 12 (1990): 365-380.

Watson, A., Shrives, P., & Marston, C. (2002). Voluntary disclosure of accounting ratios in the UK, British Accounting Review, 34(4), pp. 289-313.




How to Cite

Khanna, R., & Chahal, B. P. S. (2019). An assessment of Information disclosures by Pharmaceutical Industry: Evidence from India. Multidisciplinary Journal for Education, Social and Technological Sciences, 6(2), 147–174.