e-ISSN 2300-3065 p-ISSN 2300-12402025, volume 14, issue 1 Copernican Journal of Finance & Accounting Date of submission: December 13, 2024; date of acceptance: June 2, 2025. * Contact information: srikanthyadav444p@gmail.com, psk@ibsindia.org, Depart- ment of Finance and Accounting, ICFAI Business School (IBS) (A Constituent of IFHE, Deemed to be University), Hyderabad, Telangana, India, phone: +91 9703664124; ORCID ID: https://orcid.org/0000-0003-3176-9675. Potharla, S. (2025). Bridging Disclosure Gaps: The Role of Institutional Investors in Contingent Liabilities Reporting by Indian Listed Companies. Copernican Journal of Finance & Accounting, 14(1), 71–86. http://dx.doi.org/10.12775/CJFA.2025.004 sriKantH PotHarla* ICFAI Business School, IFHE, Hyderabad BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS IN CONTINGENT LIABILITIES REPORTING BY INDIAN LISTED COMPANIES Keywords: contingent liabilities disclosure, institutional ownership, agency theory, emerging markets, corporate transparency. J E L Classification: D82, G23, G34, M41. Abstract: This study addresses an underexplored aspect of disclosure literature by examining how institutional investor heterogeneity – specifically foreign institution- al 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 infor- mation asymmetry and enhance corporate transparency. Using data from 430 listed In- dian 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 own- ership significantly enhances CLD, with FII exerting a notably stronger influence com- pared to DII. Larger firms exhibit higher disclosure levels due to increased scrutiny, whereas growth-oriented firms tend to limit disclosure strategically to protect com- petitive advantages. Sectoral analysis reveals stricter compliance in Basic Materials and Consumer Non-Cyclicals industries, with comparatively lower disclosure in the Fi- mailto:psk@ibsindia.org Srikanth Potharla7272 nancial and Technology sectors. The study contributes theoretically by highlighting in- stitutional investors’ multifaceted roles as governance agents, stakeholder representa- tives, 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.  Introduction Introduction The disclosure of contingent liabilities – uncertain financial obligations depend- ent on future events – is essential for corporate transparency and accountabil- ity. Firms increasingly face pressure to provide reliable, forward-looking infor- mation to meet stakeholder expectations and regulatory mandates. However, the extent and quality of contingent liabilities disclosure (hereafter, CLD) vary significantly, influenced by differences in ownership structures and governance practices. This study investigates the influence of institutional investors, specif- ically foreign institutional investors (FII) and domestic institutional investors (DII), on CLD within the Indian corporate environment. As a critical aspect of risk communication, CLD impacts investor confidence, credit ratings, and over- all market efficiency. Understanding the determinants of CLD in emerging mar- kets like India is vital for aligning governance systems with global transparency standards. Institutional investors possess the resources and incentives to de- mand greater transparency, yet their distinct roles in shaping CLD remain un- derexplored, warranting further examination to understand their impact on re- ducing information asymmetry and enhancing decision-useful reporting. This research draws upon three theoretical frameworks. Agency theory (Jensen & Meckling, 1976; Shleifer & Vishny, 1997) highlights the conflict be- tween managers and shareholders, proposing that institutional investors miti- gate information asymmetry through enhanced monitoring and transparen- cy demands. Stakeholder theory (Donaldson & Preston, 1995; Freeman, Wicks & Parmar, 2004) suggests that firms are accountable to various stakeholders – including regulators, creditors, and consumers and argues that transparent risk reporting meets these stakeholders’ needs. Resource dependence theory (Pfeffer, 1972; Pfeffer & Salancik, 1978; Hillman, Withers & Collins, 2009) em- phasizes firms’ dependence on external capital, proposing that institutional in- vestors, as key financial resource providers, encourage enhanced disclosure to secure ongoing funding. Together, these perspectives form a comprehensive framework for analyzing how institutional ownership shapes CLD practices. BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 7373 Existing literature underscores the role of institutional investors in promot- ing corporate transparency. For instance, Borochin, Wang and Wei (2024) and Lin, Mao and Wang (2017) demonstrate that institutional ownership improves overall disclosure standards, while Gross (2022) and Zhou and Wang (2013) link institutional ownership to better recognition of contingent liabilities. None- theless, institutional investor behavior is heterogeneous. Hsu, Lai and Li (2016) show that domestic investors may immediately influence transparency, where- as foreign investors tend to have stronger yet delayed effects. Moreover, concen- trated ownership structures and family dominance often suppress disclosure in emerging markets (Alshirah & Alshira’h, 2024; Shiri, Salehi & Radbon, 2016). Although these studies highlight the importance of institutional investors, they typically treat them as a homogeneous group, overlooking the distinct dynamics between FII and DII (Hsu et al., 2016; Alshirah & Alshira’h, 2024). The current study addresses this gap by examining the differentiated effects of FII and DII on CLD within the Indian context through a multi-theoretical lens. The empirical analysis uses data from 430 listed Indian firms, encompass- ing 5,483 firm-year observations from 2006 to 2023. Regression models test the relationship between institutional ownership and CLD, separately analyz- ing FII and DII, while controlling for variables such as firm size, market-to-book ratio, and sector-specific characteristics. The results indicate that institutional ownership significantly enhances CLD, with foreign institutional investors exerting a stronger positive influ- ence than domestic counterparts. This finding supports the theoretical asser- tions that institutional investors, particularly FIIs, reduce managerial discre- tion (Jensen & Meckling, 1976), enhance accountability to broader stakeholder groups (Donaldson & Preston, 1995), and incentivize transparency to secure capital inflows (Pfeffer, 1972). Larger firms generally disclose more due to heightened scrutiny, while growth-oriented firms may strategically withhold disclosure to protect competitive advantages. Sectoral variations further high- light how industry-specific norms and regulatory expectations shape disclo- sure practices. By situating institutional ownership and CLD within India’s evolving gov- ernance framework, this study enriches the academic understanding of inves- tor heterogeneity and disclosure practices in emerging markets. It provides actionable insights for corporate leaders aiming to align risk disclosures with investor expectations and for policymakers striving to enhance the effective- Srikanth Potharla7474 ness of disclosure regulations. Ultimately, this research contributes to ongoing efforts to improve transparency, accountability, and investor confidence in de- veloping economies. Theoretical BackgroundTheoretical Background Agency theory emphasizes the conflict between managers (agents) and share- holders (principals), typically leading to information asymmetry (Jensen & Meckling, 1976; Fama, 1980; Shleifer & Vishny, 1997). Institutional investors play a crucial monitoring role, demanding transparent risk reporting, includ- ing contingent liabilities, to curb managerial discretion and lower agency costs. By insisting on clearer and more comprehensive disclosures, institutional in- vestors strengthen internal governance mechanisms and improve informa- tional reliability. In contrast to agency theory, stakeholder theory regards firms as account- able to a broader array of groups, including creditors, regulators, and consum- ers, beyond just shareholders (Donaldson & Preston, 1995; Freeman et al., 2004). Contingent liabilities disclosure functions as a mechanism through which firms signal responsibility and establish legitimacy. Institutional inves- tors, often representing both financial and societal interests, pressure firms to meet these broader stakeholder expectations. Enhanced contingent liabilities disclosure thus reflects not only investor scrutiny but also a firm’s commitment to ethical and stakeholder-oriented transparency. Resource dependence theory (Pfeffer, 1972; Hillman & Dalziel, 2003; Hill- man et al., 2009) further underscores that firms depend on external capital and must maintain investor confidence to secure ongoing resource flows. Institu- tional investors, as key financial resource providers, wield significant influence over corporate policies and disclosure practices. Firms respond by enhancing the quality and clarity of contingent liabilities information, thereby reducing investor uncertainty and ensuring continued access to vital external resources. Together, these theoretical frameworks offer a multi-dimensional per- spective: institutional investors influence CLD by (a) monitoring and reducing managerial opacity (agency), (b) promoting legitimacy and stakeholder trust (stakeholder), and (c) securing consistent external financing (resource depend- ence). This integrated theoretical foundation clarifies why and how institution- al ownership, especially amid uncertainties surrounding contingent liabilities, enhances corporate transparency and governance. BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 7575 Literature ReviewLiterature Review A growing body of research demonstrates that institutional investors play a pivotal role in shaping corporate disclosure practices and reducing informa- tion asymmetries. Their presence often compels management to provide more timely, reliable, and decision-useful information. For instance, long-horizon in- stitutional investors improve market efficiency and drive peer pressure for clearer and higher voluntary disclosure standards (Borochin et al., 2024; Lin et al., 2017). In various markets, such as China, Japan, and the United States, institutional ownership has been linked to improved risk disclosure and bet- ter recognition of contingent liabilities (Zhou & Wang, 2013; Nagata & Nguy- en, 2017; Gross, 2022). Meta-analytic evidence supports these findings, show- ing that institutional, foreign, and state ownership enhances disclosure quality, while concentrated and managerial ownership impedes transparency (Khlif, Ahmed & Souissi, 2016). Although institutional ownership generally drives disclosure improve- ments, differences in market contexts reveal that not all institutional inves- tors behave uniformly. For example, domestic institutional ownership in Tai- wanese high-tech firms leads to immediate improvements in transparency, while foreign institutional investors exhibit delayed but stronger effects (Hsu et al., 2016). In emerging economies, factors such as family dominance and con- centrated ownership negatively impact disclosure and increase information asymmetry (Alshirah & Alshira’h, 2024; Shiri et al., 2016). Ownership-control misalignment further complicates the relationship, as seen in Chinese firms where ultimate controllers reduce disclosure quality when cash flow and con- trol rights diverge (Liu & Sun, 2010). These findings illustrate that institutional ownership’s impact on disclosure depends on governance structures, industry conditions, and legal frameworks. Despite significant evidence, gaps remain in understanding the role of insti- tutional investors in contingent liabilities disclosure. Much of the existing re- search focuses on broad measures of disclosure quality or voluntary commu- nications, with limited exploration of how institutional investors influence the complexity and timeliness of contingent liabilities reporting (Lin et al., 2017; Nagata & Nguyen, 2017). While mandatory rules like FIN 48 improve recogni- tion of certain liabilities, there is little insight into how institutional investors address risks associated with intangible assets and multinational operations (Gross, 2022; Dyreng, Hanlon & Maydew, 2019). Srikanth Potharla7676 Recent studies in emerging markets underscore the growing importance of non-financial disclosures in enhancing transparency and stakeholder trust. Baazaoui (2020) proposes refined methods for measuring disclosure quality, while Okpala and Iredele (2018) demonstrate its positive valuation effects. Similarly, Fidiana (2024) highlights how external pressures like media influ- ence voluntary risk disclosures, echoing the governance role played by institu- tional investors in shaping corporate reporting practices. Further research should clarify how investor heterogeneity and contextual factors influence contingent liabilities disclosure and advance the literature on corporate governance and transparency. Research Gap and Motivation of the StudyResearch Gap and Motivation of the Study Despite extensive literature on corporate governance and disclosure practices, limited empirical research has focused on the role of institutional investors in influencing contingent liabilities disclosure, particularly in emerging markets like India (Jensen & Meckling, 1976; Fama, 1980). Although existing studies have explored institutional ownership and its impact on corporate transparen- cy, few have focused specifically on the reporting of contingent liabilities (Zhou & Wang, 2013; Nagata & Nguyen, 2017). The scarcity of studies examining the di- rect influence of institutional ownership structures – domestic versus foreign – on contingent liability disclosures in India is particularly pronounced. This gap in the literature is crucial given the growing demand for reliable, forward-look- ing information and transparency in corporate reporting, especially in emerg- ing markets (Gross, 2022). As institutional investors fight to reduce information asymmetries through their voting power and engagement with managers, un- derstanding the mechanisms at play becomes more important. Drawing from agency, resource dependence, and stakeholder theories, this study aims to ex- plain how investor type impacts corporate disclosure practices in India (Free- man et al., 2004; Pfeffer, 1972). By addressing this gap, the study will enhance the knowledge of governance and transparency and offer a valuable contribu- tion to the theory of institutional influence on corporate disclosure practices. Despite extensive research on the influence of institutional investors on cor- porate disclosure, significant gaps remain in understanding how these forces shape contingent liabilities reporting. While previous studies have linked insti- BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 7777 tutional ownership to improved transparency and information quality (Boro- chin et al., 2024; Lin, Mao & Wang, 2018), most have focused on broad disclosure or voluntary communications measures. Few have directly examined contin- gent liabilities, a critical yet complex area of financial reporting (Gross, 2022; Nagata & Nguyen, 2017). This gap is particularly salient in emerging markets like India, where unique governance structures, regulatory regimes, and owner- ship styles may alter the nature of institutional investors’ influence. Prior stud- ies highlight that family dominance, ultimate controlling shareholders, and con- centrated ownership can undermine transparency (Shiri et al., 2016; Liu & Sun, 2010). However, limited empirical studies have explored how heterogeneous in- stitutional ownership interacts with these conditions to shape contingent liabil- ities disclosure. Motivated by these gaps, the present research seeks to clarify how FII and DII ownership differentially affect contingent liabilities reporting. In this direction, the present research aims to advance current debates in cor- porate governance, offering insights into investor heterogeneity and addressing pressing demands for improved risk transparency in emerging markets. Methodology of the Study Methodology of the Study Data and Study PeriodData and Study Period This study employs firm-level panel data extracted from the CMIE Prowess da- tabase, a widely used financial and ownership information source on Indian listed companies. The analysis focuses on firms reporting contingent liabilities and having institutional investor ownership data available. The sample spans the financial years ending March 2006 through March 2023. Sample SelectionSample Selection To form the sample, first, this study identified all listed Indian firms with data on contingent liabilities and institutional ownership for the chosen period. Then, it excluded firms with missing or inconsistent financial data. The final sample comprises 430 unique companies, representing 5,483 firm-year obser- vations. Srikanth Potharla7878 Empirical Model SpecificationEmpirical Model Specification This study estimates two linear regression models to investigate the relation- ship between institutional ownership and the extent of contingent liabilities disclosure (CLD). The first model examines aggregate institutional ownership, while the second disaggregates ownership into domestic institutional inves- tors (DII) and foreign institutional investors (FII). Industry fixed effects (sec- tor dummies) are included to control for sector-specific variations in disclosure practices. CLD=β0  +  β1(INST)  +  β2(SIZE)  +  β3(MBV)  +  β4(Debt Ratio)  +   ∑βk(Sector Dummies) (1) CLD=β0  +  β1(DII)  +  β2(FII)  +  β3(SIZE)  +  β4(MBV)  +  β5(Debt Ra- tio)  +  ∑βk(Sector Dummies) (2) ■ CLD: Contingent liabilities disclosure score computed based on a num- ber of items disclosed by the sample companies under the section contin- gent liabilities in their financial statements. ■ INST: Aggregate proportion of institutional ownership, capturing the combined holdings of all institutional investors in the firm. ■ DII: Proportion of domestic institutional investors’ shareholding in the firm. ■ FII: Proportion of foreign institutional investors’ shareholding in the firm. ■ SIZE: Natural logarithm of total assets, a proxy for firm size. Larger firms may have more complex operations and are expected to provide more detailed disclosures. ■ MBV: Market-to-book ratio, representing growth opportunities and valua- tion, which may influence the breadth and depth of corporate disclosure. ■ Debt Ratio: Ratio of total debt to total assets. Highly leveraged firms may face greater scrutiny from creditors and thus provide more rigorous dis- closure. ■ Sector Dummies: A set of industry-fixed effects to control for sector-spe- cific heterogeneity in disclosure practices and regulatory frameworks. BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 7979 Results of the Analysis Results of the Analysis Descriptive Statistics and Correlation Analysis Descriptive Statistics and Correlation Analysis Table 1. Descriptive Statistics mean std min max N CLD 3.139 1.422 1.000 9.000 5,483 INST 22.771 14.371 0.000 85.470 5,483 DII 10.413 8.164 0.000 61.130 5,423 FII 12.193 10.176 0.010 68.270 5,244 SIZE 10.649 1.562 5.276 16.090 5,483 MBV 4.626 4.321 0.510 18.620 5,483 Debt Ratio 0.876 6.821 0.000 459.260 5,483 S o u r c e : author’s calculations. Table 1 presents descriptive statistics for key variables across 5,483 firm-year observations, highlighting noticeable variation in contingent liabilities disclo- sure (CLD), which averages 3.139 on a 1–9 scale. This spread implies that while some firms offer substantial information on potential obligations, others re- main comparatively opaque. Institutional ownership averages around 22.77%, with domestic and foreign investors contributing roughly 10.41% and 12.19%, respectively, reflecting diverse investor interests that may drive firms toward more thorough disclosure. The firms vary significantly in size (SIZE 10.65) as well as in growth prospects (MBV mean = 4.63) and leverage (Debt Ratio mean = 0.88). Srikanth Potharla8080 Table 2. Correlation Matrix MBV Debt Ratio SIZE INST FII DII CLD MBV 1 Debt Ratio 0.020 1 SIZE -0.173*** 0.059*** 1 INST -0.018 -0.012 0.350*** 1 FII 0.057*** 0.012 0.304*** 0.800*** 1 DII -0.093*** -0.041*** 0.217*** 0.658*** 0.120*** 1 CLD -0.171*** 0.008 0.209*** 0.092*** 0.062*** 0.104*** 1 S o u r c e : author’s calculations. The correlation matrix shown in table 2 highlights relationships among the variables in the study. Contingent liabilities disclosure (CLD) exhibits positive correlations with institutional ownership (INST: 0.092***), foreign institution- al investors (FII: 0.062***), and domestic institutional investors (DII: 0.104***). Firm size (0.209***) positively correlates with CLD, emphasizing the role of larger firms in meeting stakeholder expectations. The market-to-book ratio (MBV) shows a significant negative correlation with CLD (-0.171***), suggest- ing that growth-oriented firms may limit risk disclosures. Regression AnalysisRegression Analysis Table 3. Regression Results for the Impact of Institutional Ownership on Contingent Liabilities Disclosure Particulars Standard Error t-statistic Prob Prob Constant 0.5800 0.0127 0.0000 0.7211 INST 0.0384 0.0140 2.7366 0.0062 SIZE 0.2397 0.0151 15.9095 0.0000 MBV -0.1434 0.0135 -10.6074 0.0000 Debt Ratio 0.0105 0.0128 0.8258 0.4090 BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 8181 Particulars Standard Error t-statistic Prob Prob Sector_Basic Materials 0.0742 0.0103 7.1959 0.0000 Sector_Consumer Cyclicals 0.0039 0.0107 0.3669 0.7137 Sector_Consumer Non-Cyclicals 0.0639 0.0121 5.2943 0.0000 Sector_Energy 0.0124 0.0125 0.9937 0.3204 Sector_Financials -0.1562 0.0120 -13.0443 0.0000 Sector_Healthcare 0.0610 0.0115 5.3129 0.0000 Sector_Industrials 0.0437 0.0107 4.0955 0.0000 Sector_Real Estate -0.0564 0.0124 -4.5625 0.0000 Sector_Technology -0.0954 0.0116 -8.2137 0.0000 Sector_Utilities -0.0595 0.0125 -4.7675 0.0000 R-squared 0.122 F-statistic 54.378 Adjusted R-squared 0.120 Prob (F-statistic) 0.000 S o u r c e : author’s calculations. The regression results indicate that institutional ownership (INST) positive- ly and statistically significantly influences contingent liabilities disclosure (CLD). This finding aligns closely with agency theory (Jensen & Meckling, 1976; Shleifer & Vishny, 1997), which suggests that well-informed, economically mo- tivated institutional owners reduce managerial discretion and information asymmetry, thereby enhancing transparency. Furthermore, stakeholder the- ory (Donaldson & Preston, 1995; Freeman et al., 2004) supports this result, as institutional investors – key stakeholders – actively encourage firms to dis- close potential risks, strengthening legitimacy and trust. Likewise, resource dependence theory (Pfeffer, 1972; Hillman & Dalziel, 2003) posits that firms re- liant on external capital must meet institutional owners’ expectations for more comprehensive reporting to secure stable resource flows. These results support recent empirical evidence. For example, Borochin et al. (2024) show that long-horizon institutional investors improve market ef- ficiency by promoting clearer disclosures in complex legal contexts. Similarly, Table 3. Regression… Srikanth Potharla8282 Lin, Mao & Wang (2018) find that institutional ownership heightens peer pres- sure to increase voluntary disclosures, while Gross (2022) and Alshirah and Alshira’h (2024) demonstrate that institutional influence leads to more rigor- ous reporting, even in riskier or emerging market settings. These studies cor- roborate our findings, indicating that institutional ownership fosters more ro- bust governance and transparency around uncertain obligations. Regarding control variables, firm size significantly and positively corre- lates with CLD, suggesting larger firms feel compelled to align with diverse stakeholder demands and regulatory scrutiny, consistent with stakeholder and resource dependence arguments (Mitchell, Agle & Wood, 1997; Hillman et al., 2009). The negative coefficient on the market-to-book ratio (MBV) indicates that growth-oriented or intangible-intensive firms may be more cautious in re- vealing potential liabilities, possibly reflecting strategic concerns about repu- tational damage or competitive disadvantage (Nagata & Nguyen, 2017; Dyreng et al., 2019). The debt ratio does not show significance, implying that lever- age alone may not determine disclosure behavior. The present study’s findings complement prior research highlighting that investor composition, rather than just financial structure, is pivotal in shaping reporting quality (Hsu et al., 2016; Khlif et al., 2016). Sectoral differences further refine our understanding of disclosure motives. Industries such as Basic Materials, Consumer Non-Cyclicals, Healthcare, and Industrial sectors positively associate with CLD, potentially reflecting strict- er compliance environments or greater stakeholder scrutiny. By contrast, sec- tors like Financials, Real Estate, Utilities, and Technology show negative asso- ciations, suggesting unique industry norms or competitive pressures that may constrain transparency. These cross-sectoral patterns align with the litera- ture highlighting that industry context drives the impetus for disclosure (Zhou & Wang, 2013; Liu & Sun, 2010). The evidence strongly supports the theoret- ical premise that institutional ownership enhances contingent liabilities dis- closure, thereby reducing agency problems, meeting stakeholder expectations, and accommodating resource dependencies. The association between institu- tional pressures, firm characteristics, and sectoral contexts provides a richer, more insightful understanding of the determinants of disclosure quality in con- temporary markets. BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 8383 Table 4. Impact of Domestic and Foreign Institutional Ownership on Contingent Liabilities Disclosure Particulars Coefficient Standard Error t-statistic Prob Constant 1.7425 0.0131 0.0000 1.0000 DII 0.0263 0.0141 1.8676 0.0619 FII 0.0830 0.0148 5.6115 0.0000 SIZE 0.1214 0.0163 7.4379 0.0000 MBV -0.2445 0.0157 -15.5292 0.0000 Debt Ratio 0.0266 0.0132 2.0138 0.0441 Sector_Basic Materials 0.0727 0.0108 6.7019 0.0000 Sector_Consumer Cyclicals -0.0106 0.0112 -0.9482 0.3431 Sector_Consumer Non-Cyclicals 0.0720 0.0126 5.7324 0.0000 Sector_Energy 0.0444 0.0128 3.4736 0.0005 Sector_Financials -0.1392 0.0125 -11.1789 0.0000 Sector_Healthcare 0.0376 0.0119 3.1693 0.0015 Sector_Industrials 0.0429 0.0111 3.8529 0.0001 Sector_Real Estate -0.0670 0.0130 -5.1589 0.0000 Sector_Technology -0.1031 0.0121 -8.5129 0.0000 Sector_Utilities -0.0359 0.0129 -2.7886 0.0053 R-squared 0.104 F-statistic 40.101 Adjusted R-squared 0.101 Prob (F-statistic) 0.000 S o u r c e : author’s calculations. The results shown in table 4 reveal that foreign institutional investors (FII) ex- ert a stronger positive influence on contingent liabilities disclosure (CLD) com- pared to domestic institutional investors (DII). While DII also promotes great- er transparency, its impact is comparatively low. This contrast affirms agency theory’s premise (Jensen & Meckling, 1976; Fama, 1980; Shleifer & Vishny, 1997) that vigilant, economically motivated owners reduce managerial discre- tion and aligns with stakeholder theory (Donaldson & Preston, 1995; Mitchell Srikanth Potharla8484 et al., 1997) by showing that more sophisticated foreign investors demand en- hanced disclosure to satisfy broader stakeholder interests. Moreover, resource dependence theory (Pfeffer, 1972; Hillman & Dalziel, 2003; Hillman et al., 2009) suggests that firms reliant on foreign capital improve CLD to maintain stable resource inflows. Recent empirical studies support these findings. Borochin et al. (2024) showed that long-horizon institutional investors improve market efficiency through clearer disclosures. Additionally, Dyreng et al. (2019) high- light the importance of investor sophistication in parsing complex risks, and Alshirah and Alshirah (2024) demonstrate how ownership structure influenc- es transparency in emerging contexts. The impact of controlling variables is qualitatively similar to that shown in table 3. Recognizing the heterogeneity of institutional investors enriches our understanding of CLD determinants. Foreign institutional investors emerge as a dominant influencer. This more granular view reveals that investor composi- tion, firm characteristics, and sectoral contexts jointly shape transparency in reporting uncertain obligations.  Conclusion and Implications Conclusion and Implications This study examines the relationship between institutional ownership and contingent liabilities disclosure (CLD) in India, emphasizing differences be- tween foreign institutional investors (FII) and domestic institutional investors (DII). The results confirm that institutional ownership significantly enhances CLD, with FII having a more pronounced impact than DII. These findings under- score institutional investors’ role as key drivers of enhanced corporate trans- parency. Theoretically, this research contributes to governance literature by inte- grating agency, stakeholder, and resource dependence theories. It illustrates how institutional investors mitigate information asymmetry, reinforce ac- countability, and shape disclosure practices through their monitoring roles, stakeholder alignment, and capital provisioning. This integrative theoretical framework offers insights into how investor heterogeneity influences disclo- sure, particularly within emerging market contexts where governance mecha- nisms continue to evolve. From a practical perspective, the study provides valuable implications for corporate managers and policymakers. Firms can strengthen governance, boost BRIDGING DISCLOSURE GAPS: THE ROLE OF INSTITUTIONAL INVESTORS… 8585 investor confidence, and improve access to international capital by aligning their CLD practices with institutional investors’ expectations, especially those of foreign investors. Regulators can leverage these findings to refine disclosure requirements, reflecting the growing influence of institutional ownership and encouraging more holistic reporting of contingent obligations. Future research may further explore the long-term impacts of enhanced CLD on firm perfor- mance, investor behavior, and systemic transparency across different sectors and geographic contexts, thus deepening the understanding of institutional in- vestors’ strategic role in shaping contemporary corporate reporting practices.  References References Alshirah, M., & Alshira’h, A. (2024). The impact of corporate ownership structure on corporate risk disclosure: Evidence from an emerging economy. Competitiveness Review: An International Business Journal, 34(2), 370–395. https://doi.org/10.1108/ CR-01-2023-0007. Baazaoui, H. (2020). For a new method of calculating the disclosure index. Copernican Journal of Finance & Accounting, 9(2), 9–24. https://doi.org/10.12775/CJFA.2020.005. 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