Corporate Disclosure Practices Research Articles

Ambiguity or specificity: The influence of merchant guild culture on managers' disclosure strategy

AbstractRecent studies indicate that culture attributes significantly influence corporate behaviour. Building on this, our study explores how merchant guild culture (MGC) influences firms' voluntary disclosure practices, specifically through managerial disclosure strategies. Analysing data from Chinese listed firms between 2010 and 2022, we found that MGC significantly reduces the specificity of managerial responses at earnings communication conferences (ECCs). This suggests that firms influenced by MGC favour ambiguous communication, aligning with the value to mitigate competitive risks. Our findings deepen the understanding of cultural influences on corporate disclosure practices and extend literature on the role of informal institutions in corporate behaviours.

Chief executive officer narcissism, power and sustainable development goals reporting: An empirical analysis

AbstractGrounded in both agency and upper echelons perspectives, this paper examines the effects of chief executive officer (CEO) narcissism and power on corporate reporting on the Sustainable Development Goals (SDGs). We theorise that CEOs' narcissistic tendencies and power will influence their firms' SDGs engagement and reporting practices. We also examine whether SDGs reporting affects firm performance. Based on a sample of FTSE 100 companies for the period 2018–2022, we test our ideas using generalised estimating equations. The results show that CEO narcissism is positively related to SDGs reporting; however, this effect is weaker in firms led by older narcissistic CEOs. Further, CEO power is negatively associated with SDGs reporting, suggesting that firms led by powerful CEOs are reluctant to integrate the SDGs. Finally, corporate SDGs reporting lacks any value‐enhancing effect on firm performance, supporting the symbolic perspective of sustainability management. Our results contribute to the literature on SDGs accounting and enrich our understanding of the underlying dynamics shaping corporate disclosure practices.

Corporate digital transformation and rank and file employee satisfaction

PurposeThis paper examines the impact of corporate digital transformation on employee satisfaction. Therefore, this study extends our understanding of the economic consequences of corporate digital transformation from employees’ perspectives.Design/methodology/approachThe data used to construct our main proxy of employee satisfaction are collected from Kanzhun.com, which provides reviews by rank-and-file employees on their employers. This study uses a large sample of Chinese firms and adopts various empirical methods to examine the impact of digital transformation on employee satisfaction.FindingsWe find a significant positive relationship between corporate digital transformation and employee satisfaction. Moreover, we document that the relationship between corporate digital transformation and employee satisfaction is more pronounced in firms with higher labor intensity and in state-owned enterprises (SOE).Research limitations/implicationsOne significant limitation is that corporate digital transformation is constructed based on word frequency analysis. This approach may be influenced by variations in corporate disclosure practices and might not accurately capture the true extent of corporate digital transformation. This limitation is not only present in our research but is also pervasive in many other studies that utilize similar methodologies. Therefore, our results should be interpreted with this caveat in mind.Practical implicationsOur study suggests that corporate digital transformation enhances employee satisfaction, providing direct evidence for managers and regulators to promote corporate digital transformation. Through digital transformation, companies can not only improve operational efficiency but also foster employee satisfaction. This dual benefit underscores the importance of investing in corporate digital transformation for long-term success.Social implicationsOur study suggests that corporate digital transformation enhances employee satisfaction, providing direct evidence for managers and regulators to promote corporate digital transformation. Through digital transformation, companies can not only improve operational efficiency but also foster employee satisfaction. This dual benefit underscores the importance of investing in corporate digital transformation for long-term success.Originality/valueOur study contributes to the literature on the economic consequences of corporate digital transformation and extends existing research on the determinants of employee satisfaction. Additionally, it provides a novel measurement of employee satisfaction for a large sample of Chinese firms.

Analyzing the Influence of Board Characteristics on Corporate Disclosure Practices: Insights from Listed Companies in Palestine

The objective of this research is to investigate how board characteristics impact the disclosure practices of corporations. The study applies it to listed companies in Palestine for the year 2023. The findings reveal a positive and significant correlation between corporate disclosure practices and specific board characteristics, such as board size, the presence of a governance committee, board insider representation, and the separation of CEO and Chairman of the Board (COB-duality). Furthermore, the study shows that the implementation of internal control governance mechanisms is associated with the highest level of corporate disclosure practices. In summary, the research highlights the influence of board composition and governance mechanisms on the transparency and extent of disclosures made by Palestinian listed companies.

Impact of corporate disclosure on dividend policy: a novel setting of COVID-19-related disclosure by Vietnamese listed firms

Purpose This study aims to investigate whether the extent of corporate disclosure, proxied by COVID-19-related disclosure, affects the dividend policy of listed firms. Design/methodology/approach The study uses a multinomial logistic regression model to examine the relation between corporate disclosure and the dividend policy of the 100 largest market-cap firms in Vietnam in 2021. The COVID-19 pandemic, with its unique impact on business operations, serves as the backdrop for this analysis. Findings The findings indicate that firms with more extensive COVID-19-related disclosure are more inclined to distribute dividends in the form of stocks or cash instead of omitting them. Originality/value This research contributes to the understanding of how corporate disclosure practices influence a firm’s financial decisions, particularly in the context of the COVID-19 pandemic. The findings hold implications for corporate financial decision-making during times of macroeconomic shock.

Sustainability reporting in corporations: A comparative review of practices in the USA and Europe

As global awareness of environmental, social, and governance (ESG) issues intensifies, corporations are increasingly recognizing the importance of sustainability reporting in demonstrating their commitment to responsible business practices. This Review provides a comparative review of sustainability reporting practices in corporations, focusing on the distinctions between the USA and Europe. The USA and Europe, as major economic regions, exhibit distinct approaches to sustainability reporting, reflecting diverse regulatory frameworks, cultural considerations, and stakeholder expectations. This review delves into the key elements characterizing sustainability reporting in both regions, highlighting the convergences and divergences that shape corporate disclosure practices. In the USA, sustainability reporting is predominantly driven by voluntary initiatives and market forces. Companies often engage in ESG reporting to meet the expectations of investors, consumers, and other stakeholders who increasingly prioritize sustainable business practices. The absence of a standardized regulatory framework has led to a heterogeneous landscape of reporting methodologies, with some corporations adhering to global standards like the Global Reporting Initiative (GRI) or adopting industry-specific frameworks. In contrast, Europe has witnessed a more structured and regulatory-driven approach to sustainability reporting. The European Union (EU) has been at the forefront of shaping sustainable finance policies, introducing frameworks such as the Non-Financial Reporting Directive (NFRD) that mandate certain companies to disclose non-financial information. European corporations, therefore, navigate a more standardized reporting landscape, aligning with established frameworks like the EU Taxonomy Regulation and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This comparative analysis explores the motivations behind sustainability reporting, the disclosure frameworks commonly employed, and the impact of regional regulatory contexts on corporate practices. By shedding light on the unique dynamics in the USA and Europe, this review contributes to a nuanced understanding of how corporations navigate the evolving landscape of sustainability reporting, ultimately fostering transparency, accountability, and responsible corporate citizenship.

Incremental value relevancies in the development of reporting of sustainability performance

AbstractSustainability reporting was introduced after financial reporting to meet the social and environmental informational needs of stakeholders, while integrated reporting was initiated to integrate financial reporting and sustainability reporting to advance the decision usefulness of corporate disclosure practices. Despite claims and evidence of the value relevance of each reporting framework exclusively, studies on the incremental value relevancies of these subsequent disclosure practices have been sparse. Using a sample of firms from the Johannesburg Stock Exchange from 2011 to 2020 and firms’ capital market liquidity performance, this study finds that sustainability reporting and integrated reporting are not only value‐relevant disclosure practices but also offer incremental value relevancies. Sustainability reporting provides incremental value relevance over financial reporting, and integrated reporting offers incremental value relevance over financial reporting and sustainability reporting. However, the findings do not find support for integrated reporting to replace the practices of financial reporting and sustainability reporting and affirm the contribution of each of the three reports in the corporate reporting space.

The impact of directors' attributes on IFRS fair value disclosure: an institutional perspective

PurposeThe current study investigates the impact of directors' attributes on the extent of compliance with International Financial Reporting Standards (IFRS) fair value disclosure requirements. The attributes investigated include directors' human capital (accounting qualification) and social capital (political association), directors' share ownership and the power distance between the chief executive officer (CEO) and the rest of the board members.Design/methodology/approachThe study uses disclosure analysis to measure the extent of compliance with the fair value disclosure requirements of IFRS. Ordinary least squares (OLS) regression is used to test the relationship between the disclosure score and directors' attributes. Data were collected from the annual reports and websites of the sample companies.FindingsContrary to conventional belief, this study's findings suggest that directors' social capital and the power distance between the CEO and the rest of the board act as more powerful factors than directors' human capital in explaining corporate mandatory disclosure. Specifically, the results indicate that powerful actors form a dominant coalition and co-opt influential constituents from the institutional domain to neutralize the effect of legal coercion and the accounting expertise of board members and Big Four audit firms on the extent of compliance with institutional (fair value) rules.Research limitations/implicationsThis study utilizes Oliver's (1991) framework of strategic response to institutional processes in the Bangladeshi context. Although the study provides new insights into corporate disclosure practices, findings are not generalizable due to different institutional settings in different countries. Therefore, future studies could replicate the approach in different institutional settings.Practical implicationsThe findings of this study will be of interest to the International Accounting Standards Board (IASB) as it focuses on a developing country that has adopted IFRS 13 and other fair value-related standards relatively recently.Originality/valueThe disclosure analysis contained in this study represents the first comprehensive analysis of the extent of compliance with the fair value disclosure requirements of IFRS. Furthermore, this study considers the impact of directors' social capital and finds that it is a more powerful determinant of the extent of compliance with IFRS as compared to human capital.

A Study on Corporate Disclosure Practices: Literature Review

This paper set downs the existing literature on Corporate Disclosure Practices. The paper includes the studies conducted on various aspects of corporate disclosure practices. The objective of this paper is to interpret the existing literature on corporate disclosure practices. Literature on corporate disclosure practices evaluation is expansive. A few research studies that have shaped the preparation of this paper are considerably discussed in this paper.

A Study on Corporate Disclosure Practices: Literature Review

A Study on Corporate Disclosure Practices: Literature Review

Religiosity at the Top and Annual Report Readability

This paper examines how individual religiosity at the top level of organizations affects the quality of their disclosure practices, as measured by the readability of annual reports. Our paper extends the recent accounting and finance literature that moves away from a location-based measure to an individual-based measure for capturing the effect of religiosity. Our findings suggest that the individual religiosity of C-suite executives matters in corporate decision-making and has positive implications for the quality of corporate disclosure practices, as reflected by more readable reports. This main finding is primarily driven by the religiosity of CEOs. Additional findings also suggest that the effect of religiosity is not solely driven by the religious denomination of the majority group within a given location-based setting. Previous research using religiosity proxies based on the majority religion in the locale of firms’ headquarters may have measurement issues that disguise the effect of religiosity. This issue is particularly problematic when CEOs or other executives participate in minority religious denominations. Overall, our paper finds that CEO religiosity is an important attribute that affects the overall quality of business practice.

Does the Level of Intellectual Capital Affect Meeting the Information Needs of Social Media Users in the Field of Sustainability? The Case of the World’s Largest Energy Industry Companies

It is increasingly essential for companies to communicate appropriately about sustainability. In today’s world, with the massive spread of social media’s popularity as a critical communication channel, sustainability is also present in the Internet disclosure practices of many enterprises. It is also presumed that firms’ intellectual capital (IC) plays a vital role in the quality of corporate disclosure. Our paper aims to explore to what extent disclosure practices of firms via social media fulfill the needs of stakeholders for information related to sustainability. We also test how IC impacts this disclosure. We analyze tweets of the world’s largest energy industry companies to assess if this disclosure meets the stakeholders’ expectations regarding sustainability topics. Using a common measure of IC, we also check whether its level determines sustainability disclosure. This study provides several contributions to the literature. The findings may help understand companies’ responsiveness to sustainability information needs. The chief contribution also lies in its focus on how the IC level influences the sustainability disclosure practices via social media. The findings may have implications for organizations in creating and using social media channels when developing a dialogue with stakeholders on topics regarding sustainability. Conclusions also provide new insight on IC’s importance in corporate disclosure practices on sustainability.

Is silence golden sometimes? Management guidance withdrawals during the COVID-19 pandemic

The many management guidance withdrawals during the COVID-19 pandemic have attracted considerable attention from the media, investors, and regulators. This study analyzes the determinants and consequences of these withdrawals. We find that guidance withdrawals are due to economic uncertainty, resulting from firms’ exposure to the COVID-19 pandemic rather than poor financial performance. Also, the effect of COVID-19 exposure on guidance withdrawals is stronger when firms face higher litigation risk. Further, guidance withdrawals result in abnormally large trading volumes and high analyst forecast dispersion but do not harm stock prices or the level of analyst earnings forecasts. Overall we believe the findings have implications for understanding corporate disclosure practices during periods with heightened economic uncertainty.

Disclosure Committees: Implications for Disclosure Quality and Timeliness

ABSTRACT To help companies comply with the certification requirements under Section 302 of SOX, the SEC recommends issuers form a disclosure committee. In this study, we examine the effects of disclosure committees on disclosure quality and timeliness. We find that the presence of disclosure committees is associated with higher quality and more timely corporate disclosure. In addition, we provide evidence that the benefits of disclosure committees on disclosure quality are greater if membership detail is publicly revealed and that benefits of the committee may be greatest for firms that experience a negative disclosure event. Lastly, we provide evidence that disclosure committees are associated with higher quality earnings announcements and lower likelihood of receiving a severe SEC comment letter. Collectively these results suggest disclosure committees are not merely ‘window dressing’, a conclusion with implications for practitioners, regulators, and academics interested in improving corporate disclosure practices.

Determinants of Firm-Level Voluntary Corporate Disclosure in Emerging Markets: A Meta-Regression Analysis

The purpose of this paper is to determine which factors are most important in voluntary corporate disclosure at firm level in emerging markets. The study characteristics that cause differences in results in the original empirical studies are also examined. This study applies a meta- regression technique developed by Stanley and Jarrell (1989) to a sample of 32 empirical studies published between 2011 and 2020. The study findings reveal that the financial crisis variable, region of the study variable, and weighting of the dependent variable significantly affect study results of the original empirical researches. Moreover, the most important and robust determinants of corporate disclosure in emerging markets are board independence and foreign listing status. Study findings also indicate that firm size, which is identified by most empirical studies to be a significant and most robust determinant of corporate disclosure, to be insignificant in this meta-regression study. This study will help to resolve the ambiguity that has existed over the past decade in literature as to which factors are really important in voluntary corporate disclosure practices in emerging countries. Secondly, this study extends the literature relating to corporate disclosure practice in emerging countries.

Relationship between Corporate Information Disclosure and Financial Performance in Saudi Arabia

This study explains the influence of the corporate disclosure of firms listed on the Kingdom of Saudi Arabia’s stock exchange (Tadawul) on their subsequent financial performance. The research was conducted using an empirical-analytical approach at an explanatory level. Hypotheses were formulated based on secondary data and a general linear model that explains the financial performance measures based on the relevant corporate information disclosed by companies listed on Tadawul was used. Firms that disclosed the use of their strengths and resources to achieve objectives related to financial, economic, and environmental issues had a negative impact on the excess return expected beyond the systematic risk-adjusted return. Jensen’s alpha index was found to be the most appropriate financial performance measure to evaluate the relationship between corporate disclosure practices and firms’ subsequent performance. This study contributes to a better understanding of how the International Integrated Reporting Framework fosters value creation in financial capital. To the best of the author’s knowledge, this is the first study to use statistical procedures to explain the simultaneous effects of multiple explanatory variables on multiple explained variables, which constitutes a major methodological contribution.

Intellectual capital disclosure on Twitter – empirical evidence from the world’s largest companies

PurposeThis study aims to examine intellectual capital disclosure (ICD) on Twitter by 60 of the world’s largest companies and explains the main themes communicated to stakeholders. The second objective is to determine which topics provoke most stakeholders’ reactions.Design/methodology/approachThe authors perform content analysis on more than 42,000 tweets to examine ICD practices along with the reactions of stakeholders in the form of retweets and “favorites” toward the information disclosed.FindingsIntellectual capital (IC) is an important theme in corporate disclosure practices, as more than one-third of the published tweets refer to IC. The world’s largest companies focus on relational capital information, followed by human and structural capital. The main IC themes disclosed were management philosophy, corporate reputation and business partnering. Tweets related to IC are of greater interest to stakeholders than other tweets and provoke more reactions. There is no complete consistency between the topics most intensively disclosed by companies and those that elicit the most vivid responses from the addressees.Practical implicationsThis study offers an understanding of the world’s largest companies’ practices that refer to ICD via social media and has implications for organizations in the creation and use of communication channels when developing a dialogue with stakeholders on topics regarding IC that may lead to better management of IC performance.Originality/valueThis paper is a response to the call for studies on ICD via social media, which is strongly highlighted in the recent literature concerning future research on IC and until now was almost absent in the field of business units. This research provides in-depth insights into the use of Twitter to disclose IC elements and indicates which fields and topics of this disclosure provoke stakeholders’ reactions, which is a novelty in ICD studies.

Revisiting the International integrated reporting framework: What's new in the version (January 2021)?

Subject. This article discusses the innovations of the revised International Integrated Reporting Framework. Objectives. The article aims to highlight the major changes made to the International Integrated Reporting Framework in relation to their revision and assess their impact on integrated reporting practices. Methods. The study relies upon analysis and synthesis, comparison, generalization, and abstraction. Results. The article gives the reasons for the need to revise the International Integrated Reporting Framework and explains the essence of the major changes. Conclusions. The major changes relate to the responsibility for the integrated reporting of corporate governance, the explanation of the term Outcomes when describing the business model, and approaches to disclosure in an integrated report of results information in terms of the impact (positive and negative) on different types of capital. The revised International Integrated Reporting Framework (January 2021) does not contain fundamental changes, while at the same time addressing the urgent terminology and practical problems identified in their application. Their application can improve corporate disclosure practices.

Governance Vis-à-Vis Investment Efficiency: Substitutes or Complementary in Their Effects on Disclosure Practice

Prior studies provide evidence that both corporate governance and corporate investment efficiency affect corporate disclosure practice. In this paper, we examine their joint effect on disclosure. In particular, we examine whether corporate governance quality and corporate investment efficiency act as substitutes or complements in their impact on narrative disclosure. We collect disclosure scores from Lancaster University’s Corporate Financial Information Environment (CFIE) website for a sample of non-financial UK companies for the period 2007–2014. We regress measures of corporate governance and corporate investment efficiency on two different proxies of disclosure practice (performance commentaries disclosure and the tone of narrative disclosure). Consistent with prior studies, we find that both governance and investment efficiency affect disclosure. We contribute to narrative disclosure studies in two crucial respects. First, we provide empirical evidence that governance and investment efficiency has a complementary effect on performance commentaries disclosure. Second, we contribute to the disclosure tone literature by providing empirical evidence that both governance and investment efficiency have a substitution effect on the tone of narrative disclosure.

Is Silence Golden Sometimes? Management Guidance Withdrawals During the COVID-19 Pandemic

The large number of management guidance withdrawals during the COVID-19 pandemic has attracted considerable attention from the media, investors, and regulators. This study analyzes the determinants and consequences of such withdrawals. We find that guidance withdrawals are due to economic uncertainty resulting from firms’ exposure to the COVID-19 pandemic rather than poor financial performance. Also, the effect of COVID-19 exposure on guidance withdrawals is stronger when firms face higher litigation risk. Further, guidance withdrawals result in abnormally large trading volumes and high analyst forecast dispersion but do not negatively affect stock prices or the level of analyst earnings forecasts. Overall, we believe the findings have implications for understanding corporate disclosure practices during periods with heightened economic uncertainty.