Content Of Disclosure Research Articles

Mutual Disclosures and Content Intimacy in Customer Group Engagement: Evidence from Online Chat Groups

Firm-hosted online chat groups (OCGs) are an emerging strategy for businesses to organize online activities and engage customers. It enables real-time conversations in a relatively private and anonymous environment. Our paper investigates the role of information disclosure in customer engagement in OCGs. Based on information disclosure theory, we disentangle two types of disclosures, self-disclosure and reverse-disclosure, which we refer to as mutual disclosures. We examine the effects of mutual disclosures from different OCG parties (i.e., focal customer, peer customers and brand managers) on focal customer’s subsequent engagement. Moreover, we examine the intimacy levels of disclosure content and explore the interplay of mutual disclosures regarding content intimacy consistency. Text mining techniques are employed to identify group conversations and measure content intimacy levels of personal disclosure messages. Our findings reveal that mutual disclosures between focal customers and their peers induce more subsequent engagement. Our findings uncover multifaceted influences from content intimacy consistency between mutual disclosures on customer engagement. The results of this paper extend our understanding of how personal information exchange in online group conversations affects user engagement. They also provide insights into the interactivities among group members and will help firms develop strategies for customer relationship management through OCGs.

Behind the Hashtag: Online Disclosure of Mental Illness and Community Response on Tumblr.

The present study examined personal disclosures about mental illness and the responses of online community members on the social media platform, Tumblr. We sampled public blog posts of 14,626 Tumblr users disclosing ten different mental health diagnoses using hashtags (e.g., #depression, #anxiety, and #anorexia). We examined the content of users' disclosures, predictors of disclosure frequency, and predictors of online community response. The content of most disclosures was related to users' emotions and cognitions about their mental health and their feelings of interpersonal loss and change over time. Content varied with users' disclosure frequency and with self-identified mental health diagnoses. Predictors of disclosure frequency included the "self effects" of writing about oneself or one's opinions, such as self-concept formation, and "reception effects" of receiving responses to one's writing. User disclosures generally increased with frequency of community response (reception effects), and the degree of this effect differed depending on the disclosed diagnosis (self effects). The responses of online community members also varied significantly across disclosed diagnoses. The implications of our findings for community research and action are discussed.

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

PurposeThis study examines whether manipulation in attributes of corporate narrative disclosures and the use of graphical representations can bias non-professional investors' judgment towards firms' future performance, in an emerging market context.Design/methodology/approachThe authors conduct three different experiments with a 2 × 2 between-subjects design, using accounting and finance senior undergraduate students to proxy for the non-professional investors.FindingsResults show that simple (more readable) disclosures improve non-professional investors' judgment towards firms' future performance. In addition, it is found that non-professional investors are prone to a recency effect from the intentional ordering of narrative information, when using complex (less readable) narratives. However, no primacy effect is found, when using simple (more readable) disclosures. The results further provide evidence that the inclusion of graphical representations, along with the manipulated narrative disclosures, can moderate the recency effect of information order, when using less readable and complex narrative disclosures.Research limitations/implicationsThe results reveal that although the content of corporate disclosures can be objective, neutral and relevant, manipulation in textual features and the use of graphical presentations, can interact to impact how non-professional investors perceive and process the disclosed information. This study provides an Egyptian evidence regarding this issue, as the majority of prior studies concentrate on developed capital markets. In addition, it contributes to prior studies evaluating the appropriateness of the Belief Adjustment Model predictions about the effect of textual presentation order on decision-making, by providing evidence from an emerging market.Practical implicationsResults attempt to increase the awareness of investors and encourage them to use multiple sources of information to avoid the probable bias that can result from management's manipulation of narratives. In addition, the study could be of interest to regulators and standard-setters, where the results reveal the need for guidelines and regulations to guide the disclosure of narrative information and the use of graphical information in corporate reports.Originality/valueTo the best of the authors' knowledge, this is the first study to examine the effect of two impression management strategies in narrative disclosures (readability and information order), along with the use of graphical representations, on non-professional investors' judgment in an emerging market, like Egypt.

Institutional investors, stewardship code disclosures and audit fees

PurposeThis study uses content analysis of disclosures under the Japanese Stewardship Code to examine how investee company audit fees are influenced by institutional investor governance.Design/methodology/approachScores are developed based on objective and verifiable Code disclosures made by the top-five institutional investors of Nikkei 225 index companies. The scores are related to management of conflicts of interest, monitoring actions and resource availability connected with stewardship.FindingsThe results show that higher scores on monitoring and resource availability are associated with lower audit fees. The extent of resources that institutional investors allocate to playing an effective stewardship role is found to be the primary determinant of their influence on audit fees. Overall, the findings are consistent with governance by institutional investors reducing audit risk and audit effort, which leads to lower audit fees.Originality/valueThe study offers new insights because there is no apparent prior research that uses Code disclosure content to measure institutional investor governance. This provides new information on the open question of the relation between audit fees and institutional investor governance.

Cybersecurity risks disclosure and implied audit risks: Evidence from audit fees

This study examines the association between companies' cybersecurity risk disclosures and audit fees. Based on a sample from 2005 to 2018, we find that companies' audit fees are not only influenced by the content (number of words), but also by the language (readability and litigious language) disclosed in their cybersecurity risk disclosures. We extend prior studies and find that audit firms assess audit risks not just by evaluating actual cyber breach incidents, but also the cybersecurity risks disclosures more generally. The implication is that the auditor incorporates into their risk assessments, and accordingly their fee structures, the nature and content of cybersecurity risk disclosures. In general, more readable disclosures can reduce audit fees and perhaps other monitoring costs incurred by SEC registrants.

IS ENVIRONMENTAL PROTECTION A CENTRAL ISSUE TO THE BUSINESS STRATEGY OF HIGH PROFILE COMPANIES? CONTENT ANALYSIS OF WEBSITE CORPORATE COMMUNICATION

The paper focuses on exploring the way high profile companies with direct environmental impact use the website corporate communication to report on their environmental policies and practices. Employing a semantic analysis based on computer-aided techniques (VOSviewer), the paper aims to identify the themes revealed by the terms' frequency and co-occurrence from sustainability reports that indicate how central environmental protection is integrated to business strategy. The findings pinpoint to substantial differences of approach regarding the extent and content of environmental disclosure. State-owned enterprises and privatized firms display poor environmental reporting due to their long past of non-accountability and the weak motivation to engage in legitimacy building. On the contrary, MNEs are aware of the role of corporate communication in enhancing organizational legitimacy, thus their reporting encompasses a wider range of issues related to environmental protection. Corporate disclosure is well-structured in three major themes regarding environmental policy, environmental management system and social impact. Although MNEs acknowledge their environmental footprint and show a strong commitment to reduce the negative externalities, the themes relevant to the environmental management system display less connectivity and semantic coherence.

Managerial career concerns and the content of corporate disclosures: An analysis of the tone of earnings press releases

This study examines how the narrative content of corporate disclosures is affected by managers’ career concerns, measured by the enforceability of noncompete provisions in employment contracts. We provide empirical evidence that career concerns lead managers to manipulate the content of corporate disclosures by inflating the tone of earnings press releases to convey a more optimistic picture about the firm’s financial performance. We ensure the causality of our findings by exploiting changes to noncompete enforceability following court rulings. We also show that tone inflation is stronger when CEOs are younger, less capable and less experienced, as well as for managers of firms with more independent boards, more analysts following and better governance.

China’s financial sector sustainability and “green finance” disclosures

PurposeThis paper aims to provide a longitudinal analysis of influences on China’s financial sector’s sustainability reporting practices, examines “green finance” disclosures and undertakes subsector comparisons. The state’s impact on the quantity and quality of reporting practices is analyzed.Design/methodology/approachContent analysis is used to examine the volumes, frequency and content of sustainability disclosures by China’s financial institutions. Survival analysis is used to identify factors significant in firms’ initiation of these disclosures. In total, 308 firm-year observations on disclosures are examined for 2007–2016.FindingsChina’s financial sector’s sustainability reporting pieces of evidence an “emerging stage” (2007–2009), “developing stage” (2010) and “greening stage” (2011–2016). The roles of institutional theory and regulatory pressure in explaining Chinese financial firms’ reporting behaviours are supported.Research limitations/implicationsThis study has several limitations. Firstly, given data restrictions, use of a relatively small sample size. Secondly, it examines different categories of disclosures made by financial firms, not more detailed content. Thirdly, is the potential overlap in disclosure themes under the classification scheme.Practical implicationsChina’s financial sector’s adoption of sustainability reporting has been institutionalized, mainly in its banking subsector, consistent with general regulatory pressures.Social implications“Greening the finance system” is examined in China’s context, as the country transforms from a resource and pollution-intensive to a green economy.Originality/valueThe financial sector is normally excluded from in-depth qualitative research. This study examines China’s financial sector’s responses to recent governmental pressures on green finance disclosures.

The influence of corporate governance characteristics on human capital disclosure: the moderating role of managerial ownership

PurposeThe main objective of this paper is to analyse the content and extent of human capital disclosure by Spanish companies. It studies various factors related to the board of directors’ composition and functioning. These factors can be seen as mechanisms of corporate governance and the moderating role of managerial ownership, which help predict the behaviour of managers in relation to the human capital disclosure.Design/methodology/approachThis study develops and applies a more comprehensive framework for coding information on human capital, integrating the intellectual capital and social responsibility perspectives in order to explain the content and extent of human capital disclosure. The research was based on a content analysis of 210 corporate reports from 2007 to 2016. A system-GMM estimator was used to test the hypotheses in four dynamic linear regression models of balanced panel data in order to address concerns of endogeneity.FindingsThe results show that companies are adapting to new regulations and voluntarily disclosing information on human capital – a trend which signals their commitment to responsible attitudes towards employees and stakeholders. The results also show that board composition and functioning are mechanisms of supervision, control and legitimacy that promote human capital disclosure, with managerial ownership acting as moderator for aligning interests between managers and stakeholders.Originality/valueThis study contributes to the literature on human capital disclosure by introducing a broader conception of human capital to coding information. It accomplishes this through considering aspects of the intellectual capital and social responsibility approaches, which provide a better understanding of companies’ human capital disclosure. In addition, it seeks to enrich the debate about the effects of corporate governance mechanisms– such as boards of directors and managerial ownership – on human capital disclosure.

Disclosure tone management and labor unions

AbstractBy analyzing the influence of labor unions on the narrative content of corporate disclosures, we provide empirical evidence that managers deflate the tone of earnings press releases in order to convey to unions a less optimistic image of firm financial performance. We find that the tone of the qualitative information in earnings press releases is significantly less optimistic as the degree of unionization increases, and particularly when financial performance is strong. The results of quasi‐natural experiments suggest that labor unions causally affect the use of tone deflation, and the deflation is stronger during labor negotiations. Our findings also indicate that labor unions lead to a significant weakening of the signaling value of the tone of earnings press releases in predicting future performance.

Classifying the Contents of Cybersecurity Risk Disclosure through Textual Analysis and Factor Analysis

ABSTRACTCybersecurity has garnered much attention due to the increasing frequency and cost of cybersecurity incidents and has become a significant concern for organizations and governments. Regulators such as the Securities and Exchange Commission (SEC) have also shown an interest in cybersecurity and the quality of cybersecurity risk disclosures. This paper examines the informativeness of cybersecurity risk disclosures when cybersecurity incidents or related internal control weaknesses are reported. In particular, we propose a quantitative methodology, which is a combination of textual analysis and factor analysis, for classifying cybersecurity risk disclosures into nine factors. Our results show different disclosing patterns among firms depending on whether they had cybersecurity incidents and internal control weaknesses. Further, our analysis indicates that firms disclose control-related factors to mediate the negative effect of disclosing vulnerability-related factors. This study provides various stakeholders, including investors, regulators, and researchers, with insight into the informativeness of cybersecurity risk disclosures.

Public companies' cybersecurity risk disclosures

Though cybersecurity risks are significant and could materially affect business operations and the integrity of financial reporting, there is limited empirical research on the cybersecurity risk disclosure trends and practices of public companies. In this study, we conduct a longitudinal study of the content and linguistic characteristics of public companies' cybersecurity risk disclosure practices as well as factors that may drive disclosure trends. The results show that the two most commonly disclosed cybersecurity risks are risks of service/operation disruption and risks of data breach. Item 1A of the 10-K Report is the most commonly used disclosure location, but some companies also use Items 1 and 7 to disclose regulation risks and cyber incidents, respectively. The length of cybersecurity risk disclosures increases linearly during the period of our study. This increase is associated with the issuance of SEC guidance (2011 and 2018), industry, overall cybersecurity risks in the general environment, company size, and prior cybersecurity breach incidents. Disclosures have also become more difficult to read in general. They are more difficult to read as firm size increases and are easier to read as the proportion of intangible assets increases or after an executive change. Firms have increased their usage of litigious words in their disclosures. Bigger firms, on average, tend to use less litigious language, but companies in industries with high business information technology intensity (e.g., consumer services, software and services, and banking) tend to use more litigious language than other companies.

How Do Intangible Resources Affect Environmental Disclosure?

While research on ESG reporting recognizes the influence of legitimacy pressure, less attention has been paid to legitimacy pressure originating from internal firm attributes. We develop a framework wherein environmental reporting is viewed as a reaction to intangible resources, the value of which is susceptible to uncertainty and tension created by potential environmental concerns surrounding the firm. We apply our framework to environmental disclosures made by US-headquartered firms listed in NYSE and Nasdaq closely followed by financial analysts and disclosure content—environmental favorableness and value relevance—and find support for our framework. Our study contributes to the literature on ESG disclosure by uncovering the impact of legitimacy pressure arising from internal firm attributes and advance research on legitimacy theory by identifying a specific decoupling mechanism.

The drivers of carbon disclosure: evidence from china’s sustainability plans

This paper adopts the legitimacy theory and stakeholder theory perspectives to explore the drivers of voluntary carbon disclosure among Chinese firms under the 11th and 12th Five-Year Plans. We use the coding technique of content analysis to capture quantitative data of carbon reduction and classify sample firms by disclosure content into three groups and then apply ordinal logit regression to test the proposed hypotheses. Firm size (Size) and profitability (Profit) are positively related to carbon disclosure; SOE blockholder (State-bloc) and high carbon emission industries (HCEI) are significantly more dedicated to carbon disclosure. However, POE blockholder (Private-bloc) and creditors (Lev) are negatively related to carbon disclosure. We also find that the effects of HCEI and Ownership differ most widely between firms in coastal areas and firms in non-coastal areas; State-bloc is more significantly related to carbon disclosure in the 12th-five period than in the 11th-five period. Chinese firms should understand that taking substantive actions of carbon disclosure, fulfilling social responsibilities, and aligning their operations to the planned economy can contribute to their sustainable development. This paper offers evidence of variations in drivers of carbon disclosure, and such variations are attributable to the differences between the two plan periods and between geographical regions. The evidence is helpful for understanding what have motivated Chinese firms to disclose carbon emission information in the two different plan periods and in different geographical areas.

The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934

We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed results. We focus on whether the Act increased earnings informativeness, improving upon prior designs by focusing on short earnings announcement windows and employing a difference-in-differences design to control for potential contemporaneous structural changes. We document an increase in earnings informativeness following the Act, which is larger for treatment firms (which withheld disclosure before the Act) than for control firms. The increase in informativeness is more pronounced for small firms (consistent with a relatively larger change in enforcement), profitable firms that do not pay dividends (consistent with higher agency costs), and firms reporting good news (which suggests that the Act increased conservatism).

Integrated reporting and performance: a cross-country comparison of GCC Islamic and conventional banks

PurposeIn the Gulf Cooperative Council (GCC) countries, the integrated reporting (IR) concept has attracted considerable attention from banks. In as much as IR is not a legal requirement anywhere in the GCC, however, the incidence of disclosure by banks across the GCC varies considerably and asymmetries exist in the content of disclosure released by banks within, as well as across, these jurisdictions. This study aims to examine the relationship between IR disclosure and financial, operational and market performance in both Islamic and conventional banks.Design/methodology/approachThis study examines five years (2012-2016) of IR from 59 banks in GCC countries with 295 observations. The integrated report index (IRI), as the independent variable, is regressed separately against three performance indicators [return on assets, return on equity and Tobin’s Q (TQ)] as dependent variables. In addition, the following two types of control variables are inserted in the regression equations in this study: macroeconomic (two indicators) and bank characteristics (three indicators).FindingsThe findings elicited from the empirical results demonstrate that, on the one hand, IR in conventional banks positively affects market performance, while negatively affecting operational and financial performance. On the other hand, the results for Islamic banks show that IR negatively affects market performance, with no discernible effect on neither financial nor operational performance. In the GCC banking sector, for the most, empirical results conflict with expectations implied by signaling theory and capital need theory. From this study, evidence suggests that GCC bank performance would not improve were IR disclosure rendered mandatory. However, that conclusion is stronger with respect to Islamic than with respect to conventional banks in the region.Originality/valueThe study provides insights into the effect of voluntary disclosure of IR as gauged by various measures of performance across Islamic and conventional banks located in a range of GCC countries. This study accordingly provides perspective on the extent to which IR can and does play a role in contributing to bank performance.

A Meta-Analysis of the Effects of Disclosing Sponsored Content

The amount of literature on the effects of disclosing sponsored content has increased greatly in recent years. Although the literature provides valuable insights into the effects of disclosing sponsored content, several research gaps remain, such as inconclusive findings, boundary conditions, and the mechanisms that explain how disclosures work. This article offers a meta-analysis of 61 papers that use 57 distinct data sets to address these research gaps. The results showed that disclosing sponsored content reduced brand attitudes, credibility, and source evaluation but increased recognition, persuasion knowledge, and resistance. Disclosure content, timing, and awareness, as well as product and sample characteristics, provide boundary conditions for the positive and negative effects of disclosures. A path model that tested the mechanism of disclosing sponsored content showed that, as suggested by memory priming effect, recognition of sponsored content increased memory but did not influence evaluation. Moreover, the understanding of sponsored content influenced evaluation, but memory remained unaffected, which corresponds to the flexible correction approach (i.e., consumers try to correct their answer to limit persuasive effects).

The information content of corporate social responsibility disclosure in Europe: an institutional perspective

This study examines how firm value (measured via stock prices) is related to corporate social responsibility (CSR) disclosure and how the institutional environment influences this relationship. To test our hypotheses, we apply textual analysis to our data on firms listed in the STOXX Europe 600 for the period 2008–2016. Our investigation of topic-specific CSR disclosure indicates that when firms shifted from voluntary to mandatory reporting, following the announcement of Directive 2014/95/EU, the association between their share price and CSR disclosure became significantly negative. For the period before the announcement, this relationship is either positive or statistically insignificant. We also show that the institutional environment can impact this relationship in four distinct ways: the level of CSR awareness, the level of employee protection, the degree of enforcement and the strength of the legal environment. We find that the first two have a negative impact on the incremental value relevance of specific CSR disclosure, whereas the last two have a positive impact. Lastly, our results also indicate that the magnitude of (a) the relationship between a firm’s CSR disclosure and its value and (b) the impact that the firm’s institutional environment has on this relationship depends on the specific CSR topics.

The monitoring role of the financial press around corporate announcements

This study finds that the financial press serves an important monitoring role by interpreting the tone of corporate announcements, moderating its impact to market participants in the process. Using textual analysis, we report that the press attenuates both the positive and negative tone of firm-initiated disclosures. However, the effect is asymmetric with the media mostly downplaying the tone of highly positive corporate press releases, consistent with the premise that management disclosures containing highly positive tone are less convincing. In addition, we find that the tone of the information produced by the financial media has an effect on market reactions above and beyond the impact of the linguistic content of corporate disclosures. Importantly, the impact of the linguistic content of corporate disclosures to market returns is moderated by the tone of new information included in media articles. Overall, this study adds new evidence to a growing body of literature suggesting that the tone of press-originated articles contains incremental information content.

Difference between the determinants of operational risk reporting in Islamic and conventional banks: evidence from Saudi Arabia

In this study, the author investigates the operational risk reporting practices of Islamic banking institutions (IBIs) and conventional banks (CBs) in Saudi Arabia. Moreover, the paper explores the joint effect of banking characteristics, corporate governance and credit rating on the informational content of operational risk disclosure (OpRiskDISC). The paper uses content analysis to collect OpRiskDISC data from annual reports during the period 2008–15. The results for each bank type show that the enhanced OpRiskDISC in IBIs is negatively associated with the number of bank branches, the financial stability of the bank, board meeting frequency, the proportion of independent members and credit rating. The results for CBs demonstrate that a bank’s size and financial stability are positively associated with OpRiskDISC. Conversely, the OpRiskDISC level is negatively affected by board meeting frequency and the number of bank branches. For the overall sample, the empirical results show that bank size, compliance with Sharia requirements and board size have a positive, significant effect on OpRiskDISC, while the number of bank branches and the proportion of independent members on the board have a negative, significant relationship with the disclosure level.