Abstract
In this study, we assess the influence of information disclosed by issuers in annual reports in accordance with therequirements of the Central Bank of Russia on the investment attractiveness of a company.The empirical base of the research consists of annual reports of 60 Russian issuers from various industries over 10 years.On the basis of applicable regulations of the Bank of Russia we compiled an author’s dictionary of terms (word forms).Using the methods of taking into consideration grammatical forms we calculated occurrences of the dictionary termsin the texts of annual reports. This study represents the first time that a rating of issuers on the basis of the disclosureindex of mandatory non-financial information (INDEX) in accordance with the Russian legislation was made. By meansof a probit regression we proved the interrelation between the disclosure index of mandatory non-financial information(INDEX) and the issuer’s investment attractiveness. Additionally, by means of a panel regression we established theinterrelation between the issuer’s investment attractiveness and the level of information disclosure which characterisesthe issuer, its securities and dividend policy, and its risk management policy.
Highlights
The transparency of information provided by issuers in public annual reports, and the completeness of its disclosure, are significant issues of discussion within the circles of professional business
Non-financial information regarding company operations is not subject to audit, is controlled by a regulator, and is disclosed in the issuer’s public annual report in accordance with the requirements established by the Bank of Russia
On the other hand, our research is different: 1) this study represents virtually the first time when the issue of influence of disclosure of certain categories of non-financial information on the attractiveness of corporate investment in accordance with the Russian legislation is considered; 2) we offer a methodology of calculation of the disclosure index of mandatory non-financial information (INDEX) in accordance with the Russian legislation, and compile an author’s dictionary of word forms which allows for evaluation of the information disclosure level; and 3) we provide a rating of the best and worst issuers according to the disclosure index of mandatory non-financial information (INDEX)
Summary
The transparency of information provided by issuers in public annual reports, and the completeness of its disclosure, are significant issues of discussion within the circles of professional business. As for Russia, in accordance with its legislation, securities issuers are obliged to provide access for shareholders to financial and non-financial information. Non-financial information regarding company operations is not subject to audit, is controlled by a regulator, and is disclosed in the issuer’s public annual report in accordance with the requirements established by the Bank of Russia. The Regulations on Information Disclosure by Public Securities’ Issuers (approved by the Bank of Russia on 30.12.2014 under No 454-P) [1] establish the order, manner, time limits, and define the type of financial and non-financial information subject to mandatory disclosure in the issuer’s public annual report. The issuer’s public annual report, along with information related to economic issues, contains data concerning non-financial aspects of the issuer’s operations (development plans, the industry sector characteristics, risks, dividend policy, management principles etc.). It should be noted that this topic is of relevance at present, as the ‘Law on Public Non-Financial Statements’ was developed within the ‘Concept of Development of Public Non-Financial Statements’ approved by order of the government of the Russian Federation of 05.05.2017 No 876-r
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Schedule a callMore From: Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438
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