Voluntary Social Disclosure in an Emerging Country: The Case of Brazil

This study aims to assess the disclosure extent and quality, as well as the percentage of audited reports, of the Brazilian companies listed on the IBOVESPA stock exchange index and explore some factors that influence disclosure quality. A content analysis of 71 annual sustainability (or similar) and integrated reports was conducted, focused on the social dimension. Multiple linear regression was used to assess the relationship between the disclosure quality index and being audited by a Big Four company, the number of members on the board of directors, the use of the Global Reporting Initiative (GRI) standards in the preparation of the reports, and the type of industry. The results suggest that although the disclosure extent is reasonable, its quality is poor. In addition, considering its voluntary nature, the disclosure-auditing index is deemed satisfactory. The results also suggest that the disclosure quality of Brazilian companies is positively and significantly influenced by being audited by a Big Four company, by adopting the GRI standards, by the number of members composing the board of directors, and by belonging to the “Energy and utility” industry. This study contributes to the extant literature by assessing the disclosure extent and quality and the percentage of audited reports of companies in an emerging economy setting—Brazil—and exploring some factors which influence the disclosure quality in emerging countries’ companies, such as auditing by a Big Four company, which has thus far been unexplored. It also contributes to increasing the awareness of the theme among managers.