OPTIMIZING NON-FINANCIAL DISCLOSURE : INSIGHTS FROM AGENCY AND SIGNALING THEORIES

Abstract

Optimizing non-financial disclosure can be effectively examined through the complementary frameworks of agency theory and signaling theory, both of which address the challenges associated with information asymmetry in financial markets. In this context, environmental, social, and governance (ESG) disclosure emerges as a key mechanism for improving transparency and reducing potential conflicts between managers and shareholders. From the perspective of agency theory, non-financial reporting enhances accountability by providing relevant information that helps align managerial actions with shareholders’ interests. At the same time, signaling theory emphasizes the strategic role of voluntary disclosure in conveying credible and value-relevant information about a firm’s performance, quality, and future prospects to external stakeholders. The integration of shareholder and partnership approaches allows for a broader understanding of non-financial communication, extending beyond purely financial considerations to include sustainable relationships with various stakeholders. Within this framework, intangible capital is recognized as a central driver of value creation and competitive advantage. Accordingly, high-quality non-financial disclosure contributes not only to reducing informational gaps but also to strengthening stakeholder trust, enhancing corporate legitimacy, and supporting long-term organizational performance.