Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.9, No.6, 2018 44 Determinants of Corporate Financial Disclosures: An Empirical Analysis of Family and Non-Family Small and Medium-Sized Enterprises Andrea Quintiliani Department of Law and Economic Sciences, Pegaso Telematic University 48 Piazza Trieste e Trento, Naples 80132, Italy Abstract Objectives. This paper aims to empirically investigate the determinants of corporate financial disclosure (CFD) and the possible associations between the extent of CFD and financial/non-financial variables. Methodology. The study is among descriptive and correlational researches and using panel data methodology on sample of family and non-family SMEs listed on AIM Italia. The time under study was from 2006 to 2011. In addition, the hypotheses of the research have been tested analyzing the content of annual reports pertaining to each of Italian SMEs. Findings. In general, the findings indicate that the agency and proprietary cost theories play a vital role in explaining the quantity of financial disclosure by Italian SMEs. Research limits. Data used for this study need to be subjected to more statistical tests in order to establish a more robust validity and reliability. It is necessary to acquire further strengthened data and assume a variety of conditional situations. It is expected that subsequent studies can use larger samples and diversified by sector, a broader geographic base and a multi-faceted analyses. Practical implications. The results of this study could assist Italian SMEs and bankers in integrating CFD in their corporate strategies and help the local and international business communities in understanding the characteristics of CFD in Italy. Originality of the study. The study is the first attempt to understand practice by which family and non-family SMEs communicate their financial disclosure to different stakeholders. Keywords: CFD, Family business, SME, Agency cost, Financial crisis, Stakeholder perspective 1. Background and motivation The traditional sectors in which Italian companies operate are considered high visibility with a large stakeholder’s base. Italian firms use, amongst other communication channels, their annual reports to interact with stakeholders. This behavior by corporation, including family business, is referred to as corporate financial disclosure (CFD) defined as (Alfraih & Almutawa, 2014): «A manifestation of the practice by which organizations communicate their financial disclosure to different stakeholders». Several empirical studies on corporate financial disclosure examined the extent of disclosure in annual reports in both developing and developed countries. Surprisingly, despite the critical role of corporate disclosures in mitigating information asymmetry, the literature on the extent of corporate disclosure documented substantial variations in disclosure levels across countries and among firms (Glaum & Street, 2003; Al- Shammari, et al., 2008; Demir & Bahadir, 2014; Aljifri, et al., 2014). The notable variations in the level of disclosure across firms worldwide encourage researchers to examine factors behind this variation. Firm corporate-specific characteristics are expected to be important factors that influence the level of disclosure. Empirically, several disclosure studies explored the relationship between the extent of corporate disclosure and several institutional and corporate characteristics. For instance, Aljifri et al. (2014) conducted a study on UAE listed and unlisted companies and concluded that the industry, type, size, profitability, liquidity, ownership diffusion, audit quality, leverage, internationality, age, and listing status significantly explain the variation in the level of disclosure. Despite the numerous studies on CFD, its determinants and the factors that affect CFD, the related literature has superficially touched on the potential relationship between the recent global financial crisis and corporate financial disclosure. The systemic breakdown in the United States during 2007 and 2008 led to widespread failures of financial institutions or freezing up of capital markets. The result was loss of liquidity, collapse of stock indices, loss of confidence among investors, and increased risk aversion. With respect to the effect of the recent financial crisis on disclosure, Haji and Ghazali (2011) examined CFD in the annual reports of Malaysian companies in 2006 before the start of the financial meltdown and in 2009 after its onset. Their results show that the extent and quality of the disclosures increased significantly in an attempt from companies to legitimize their actions and reduce their exposure to financial, social, and political