Corporate Transparency Research Articles

Navigating Applied Artificial Intelligence (AI) in the Digital Era: How Smart Buildings and Smart Cities Become the Key to Sustainability

This paper aims to understand the critical path of digital transformation in construction by investigating major drivers for technical innovation, e.g., in smart cities. Despite available new technologies, increasing societal, environmental pressure, and data complexity, the branch lacks a will to innovate and qualified personnel. The study identifies the potential of innovation and the pillars of sustainability to define ways to responsibly use data-driven, smart technologies in smart cities throughout their holistic life cycles. The mix of expert interview surveys and structured literature analysis is the basis to examine the status quo and innovative approaches. It enables to critically investigate limitations and human, societal and environmental impacts. This study’s findings offer orientation in navigating innovation for resilient, agile ecosystems with the dynamic ability to adapt to changing environment and to grow with the change and achieving the sustainable development goals toward preservation and upgrade of buildings instead of new construction. The key challenge for sustainable technical innovation is to exploit human and societal potential. The study allocates the lack of research in this field and inadequate education as most significant limitations and critically evaluates that a disruptive culture of thinking may enable the sustainable design of smart cities. This study is unique as it develops a comprehensive, transparent Corporate Digital Responsibility Policy Framework and provides orientation to assume ethical, societal, environmental responsibility as part of creating resilient, agile environments.

Does the Founder CEO Receive a Higher Pay for the Firm’s Performance? Evidence from Malaysia

This paper examines whether firms run by a founder chief executive officer (CEO) have higher pay and whether their power sources from chairing the board, remuneration committee, tenureship, or share ownership affect the pay-performance nexus. Data for the study was hand-collected amongst 362 family-owned firms listed in Bursa Malaysia from 2009 to 2015 and analysed via the generalized method of moments (GMM) system to address endogeneity. The results showed that initially there was a significant positive pay-performance relationship in Malaysian family-owned firms; however, the founder CEOs had a weak influence on the pay-performance nexus. Secondly, the founder CEOs’ influences on the pay-performance nexus mainly came from their ownership power and their structural power as the chairman of the board. Thirdly, the pay-performance nexus tended to be positive and stronger when the family member of the CEO was chairing the board of directors and remuneration committee, instead of themselves, but the relationship changed to negative when more independent directors sat on the board, including a remuneration committee. The findings offered some policy implications for the regulators to enhance corporate transparency on the directors’ remuneration and ownership.

Childcare counsel: House Rules

The Economic Crime and Corporate Transparency Bill – what does it mean for business owners? Fiona Phillips, corporate and commercial team solicitor at Morgan LaRoche, explains

Corporate tax avoidance: a systematic literature review and future research directions

PurposeThe increased interest among academicians to explore more about tax management behavior is evident in the literature on corporate tax avoidance. This paper aims to illustrate the multiple aspects that influence the tax avoidance behavior of corporations and its impacts through the systematic review method.Design/methodology/approachThis study used “Tax Avoidance” OR “Tax Aggressiveness” OR “Tax Planning” as search strings to extract the relevant literature from the Scopus database. This study is a comprehensive analysis of existing literature on corporate tax avoidance behavior. Further, the keyword network analysis has been used to find out the most explored and dry research areas related to corporate tax avoidance behavior using VOSviewer software.FindingsThe study finds that taxation decision is an important managerial decision. Managers adopt tax avoidance tactics to boost postax profits to meet the shareholders’ expectations, particularly of risk-averse shareholders, and sometimes for their benefit also. With this, this study also finds that firms’ characteristics, political connections and corporate social responsibility activities also impact taxation decisions. In addition, the study identifies that tax-avoiding behavior has a contradictory impact on firm value, market growth and corporate transparency disclosure decisions.Research limitations/implicationsThe study assists the researchers by providing a brief overview of tax avoidance behavior, for corporates in understanding the implications of tax avoidance, and for policymakers to fix the taxation loopholes and bring necessary tax reforms.Originality/valueThis study adds to the existing literature by providing a thorough overview of theories, determinants and outcomes of corporate tax avoidance behavior.

Exploring the Impact of Firm Transparency on Green Innovation Legitimacy: Empirical Evidence from Listed Companies in China

Although the existing literature on innovation has little focus on information transparency, we aimed to determine how information transparency affects the legitimacy of green innovation in China. Accounting data, analyst data, and external audit data are used to evaluate a company’s information transparency. This paper examines the impact of corporate transparency on the legitimacy of green innovation in the context of three external information sources to which stakeholders have access, utilizing data from 4017 Chinese companies listed between 2005 and 2020. Our estimation results indicate a significant positive correlation between informational accessibility and green innovation legitimacy. The results demonstrate a stronger relationship between corporate green innovation legitimacy and greater earning quality, more analyst monitoring, more accurate analyst surplus estimations, and international audits by the Big Four. This study seeks to present new empirical findings for Chinese listed companies in order to strengthen the legality of green innovation and validate the significance of corporate information transparency via a robustness test.

The influence of digital divide frames on legislative passage and partisan sponsorship: A content analysis of digital equity legislation in the U.S. from 1990 to 2020

Government funding is essential for digital equity. Scholarship on policies to improve internet access often examines the funding mechanisms behind subsidies, or the quality and reach of services provided. However, a better understanding of the issues and constituencies to receive government support to date may help digital equity activists more strategically lobby for new digital divide policies in the future. To do this, we take a macro-level approach to Van Dijk's resources and appropriation theory and examine how the framing of all digital divide–related U.S. Congressional legislation introduced between 1990 and 2020 may be associated with a bill's passage or the political party of its sponsor. Content analysis revealed that bills highlighting privacy literacy programs, educational outcomes, and corporate transparency were more likely to be passed into legislation. Bills sponsored by Republicans were 422% more likely of being passed into legislation. Certain frames were also associated with partisan sponsorship: Republican-sponsored bills were more often framed around deregulation, privacy programs, corporate transparency, and rural access, whereas Democrat-sponsored bills were more often framed around digital skills such as digital literacy and educational outcomes. Findings serve as a historical record of digital equity priorities in the U.S. and highlight possible strategies for future policy design.

The Moderating Role of Environmental Information Disclosure on the Impact of Environment Protection Investment on Firm Value

The presence of a link between corporate environmental protection investment and firm value is essential for enterprises to have incentives to invest in environmental protection by themselves. How environmental information disclosure affects the relationship between environmental protection investment and firm value is also an issue worth exploring. This paper uses the regression model with the industry and time-fixed effects to examine the relationship between environmental protection investment and firm value of China’s A-share heavily and non-heavily polluting enterprises from 2010–2020, as well as the moderating role of environmental information disclosure. The empirical results show that (1) there is a significant U-shaped relationship between environmental protection investment and firm value, and (2) corporate environmental information disclosure has a moderating effect. Specifically, it has an “amplifying” effect on the relationship between environmental protection investment and firm value. If a company’s environmental protection investment is insufficient, overly transparent corporate environmental disclosure will exacerbate the decline in firm value. Once environmental protection investment is up to standard, adequate disclosure can contribute to an increase in firm value.

Corporate governance and financial inclusion

PurposeThis paper examines the association between corporate governance and financial inclusion in terms of correlation. This paper examines whether countries that have a strong corporate governance environment also experience better financial inclusion outcomes.Design/methodology/approachThe indicators of financial inclusion are automated teller machines (ATMs) per 100,000 adults, bank accounts per 1,000 adults and bank branches per 100,000 adults, while the indicators of corporate governance are extent of corporate transparency index, the extent of director liability index, the extent of disclosure index, the extent of ownership and control index, the extent of shareholder rights index, minority investors protection index and ease of shareholder suits index. The association was analyzed using Pearson correlation analysis and granger causality test.FindingsStrong corporate governance is significantly associated or correlated with better financial inclusion outcomes. The regional analyses show that corporate governance has a significant positive association with financial inclusion in Asian countries and in Middle East countries. However, a positive and negative association was observed between some indicators of corporate governance and financial inclusion in European countries, North American countries, South American countries, African countries and in Middle East and North Africa (MENA) countries, implying that strong corporate governance has a positive and negative association with financial inclusion depending on the indicators of corporate governance and financial inclusion used. There is also evidence of uni-directional granger causality between corporate governance and financial inclusion.Originality/valueLittle is known about the association between corporate governance and financial inclusion. This paper is the first to examine this association.

The correlation between environmental, social and governance ratings and the transparency in Johannesburg Stock Exchange companies’ tax practices

Background and aim: The study explores the correlation between environmental, social and governance (ESG) ratings and the extent of corporate tax transparency to investigate whether ESG ratings are indicative of transparent corporate tax practices. To gain more insight, the correlation exploration is extended to the ratings achieved in the governance category and the transparency and reporting subcategory included in the overall ESG rating.Setting and method: The extent of corporate tax transparency disclosures in the corporate reports of 112 companies, listed on the Johannesburg Stock Exchange (JSE) on 28 February 2022, was assessed using a content analysis. The correlation between the ESG ratings and the extent of corporate tax transparency of these companies was then explored through correlation analysis.Results: The study provides evidence of significant correlation between overall ESG ratings and corporate tax transparency. However, no correlation was found between the ratings achieved in the governance category, or the transparency and reporting subcategory and corporate tax transparency. The latter might, however, be explained by the negatively skewed distributions of the ratings achieved in the governance category and the transparency and reporting subcategory.Contribution and conclusion: The study provides persuasive evidence that ESG ratings can be used as indicators of transparent corporate tax practices. It might provide valuable insight to boards of companies about the correlation between ESG ratings and the transparency of tax practices, encouraging them to incorporate tax governance as part of the ESG agenda. Additionally, it may be utilised by investors when making investment decisions.

Economic policy uncertainty and directors and officers liability insurance: a perspective on capital market pressures.

This study investigates the effects of economic policy uncertainty (EPU) on corporate purchases of directors and officers liability insurance from the perspective of capital market pressures. Using data on A-share Chinese listed firms from 2010 to 2021, our theoretical analysis and empirical tests reveal that higher levels of EPU increase purchases. The theoretical analysis and mediating tests reveal that capital market pressures play a mediating role in the relationship between EPU and purchases. This study also finds that the indirect ways in which EPU increases purchases consider the need for firms to mitigate litigation risks and take advantage of insurance governance. The heterogeneous analysis and tests reveal that EPU increases purchases more significantly in firms that have higher managerial agency costs, have lower corporate transparency, and are in industries with higher competition. The findings are significant for improving the risk management system in China's capital markets.

How does the European Green Deal affect the disclosure of environmental information?

AbstractThe European Union has made the fight against climate change and the achievement of a sustainable economy political priorities. To promote the ecological transition of companies and corporate transparency, a broad regulatory framework has been developed. This paper analyses the effect of institutional pressures derived from this regulatory framework on the environmental information disclosed by 832 multinationals in the period 2011–2020. The results reveal a positive global effect, although, at an individual level, this effect is only maintained for the regulations and recommendations related to non‐financial information and the European Green Deal. Furthermore, the impact differs depending on the category of environmental information disclosed.

Calling for transparency: Evidence from a field experiment

We examine how firms respond to requests for enhanced disclosure that we make on an online investor platform. Exploiting variation in firms' customer and supplier disclosures, we ask a randomized set of non-disclosing firms to provide information on their customers' and suppliers' identities. We find that the firms' probability of disclosure depends on the basis we give for the demand—requests appealing to disclosure's usefulness to investors lead to more frequent disclosure, while those appealing to regulators' preference for disclosure lead to less frequent disclosure. The requests we make on the platform lead to more frequent customer- and supplier-related inquiries from other platform users. We also find that the treatment firms' disclosure of customer and supplier information improves in the next period's regulatory filings. The findings suggest that investor platforms can enhance corporate transparency by increasing retail investors' ability to demand information.

A Bibliometric Study on Corporate Transparency and Disclosures

Corporate transparency is a critical requirement for effective governance. Through a thorough financial regulation, it has the potential to influence investors’ investment decisions in a company. The global financial crisis, in the past, has prompted a high level of openness worldwide since it frequently implies the quality of information disclosure. To make investment decisions, investors rely on the information provided by the firms. Hence it is crucial to have an encyclopaedic understanding of corporate disclosures. This research employs bibliometric analysis from a multi-industry approach to systematically synthesize and improve corporate transparency and disclosures. For 23 years, 410 journal articles were collected from the Scopus database between 1998 and 2021. This article highlights the publication trend and identifies the most influential work, authors, countries and journals. Finally, the Author, Journal and keyword co-occurrence have expressed the article’s research themes through thematic progression. Lastly, the article highlights the gaps in the literature and makes recommendations for further research.

Transparency on Corporate Governance and board of directors’ strategies

Based on agency and asymmetric information theories, the objective of this paper is to investigate whether the transparency on corporate governance is determined by strategies followed by the board of directors (liquidity, investment, capital structure, innovation and board composition impact on the corporate governance transparency). The study sample is composed by 826 observations from Latin American firms during the period 2004-2010 (128 unique firms). A two-way cluster standard errors and GMM methods have been adopted to perform the econometric analysis. Results suggest that corporate governance disclosure is attributable to changes on firm’s decisions made by the board with respect to financial aspects and innovation. However, the impact upon transparency of board composition with regards to female directors, independence and size of boards are attributable to industry and/or country effects. Although the main limitation of the study is focused on the period of analysis, the results provide important implications for the business sector, demonstrating that the board composition and the financial and innovation strategies adopted by the board encourage greater corporate transparency, thus increasing confidence in the markets.

Transparency Practice and Work Engagement: School Context

The study aimed to find out the correlation between corporate transparency practices of school management or administration and the work engagement of employees. To carry out the study and to strengthen the theory of the study, the related literature and studies were reviewed. The population of the study was all employees of the colleges and therefore the total enumeration was used. The research design of the study was descriptive assessment and descriptive correlational research design. The data were gathered through questionnaires and a weighted mean was used to measure the level of corporate transparency practices and work engagement. Pearson r was used to determine the correlation between the two variables. The study found that there is no correlation between corporate transparency practices and work engagement and therefore the hypothesis is rejected.

Is mandatory sustainability disclosure associated with default risk? Evidence from emerging markets

We examine the impact of mandatory environmental, social, and governance (ESG) disclosure on firms’ default risk. Using a comprehensive sample of 17 emerging countries, we empirically show that firms subject to the mandatory ESG regulation have decreased default risk subsequent to the mandate. This result is consistent with the argument that implementation of mandatory ESG disclosure improves corporate transparency and serves as a substitute for corporate governance mechanisms. Overall, our study supports the positive view of mandatory ESG disclosure and thus contributes to a timely debate on the pros and cons of the mandate in the economy and wider society.

Investigating the determinants of money laundering risk

PurposeWith the growing interconnectedness of global markets brought about by globalization and technological innovation, there is a heightened worldwide risk of money laundering, posing a considerable negative impact on economies and social equality. Therefore, the primary purpose of this research is to examine factors that underpin the pervasiveness of money laundering risk.Design/methodology/approachBy using a cross-section sample of 84 countries, the study uses ordered logit and multinomial logit regression to test and explain the role of main and varied determinants of money laundering risk covering countries’ economic, social, regulatory and corporate environment.FindingsThe authors conclude that, overall, the macroeconomic indicators are less relevant in influencing money laundering risk than the other factors adopted from the Basel report. Nonetheless, the volume of exports and the exchange rate were robust in both the ordered and multinomial regression analyses alongside financial secrecy, auditing standards and corporate transparency. While more financial secrecy and a higher volume of exports were found to increase this risk, the other variables showed a negative relationship. The authors further conclude that it is mostly less secrecy, more transparency and better auditing that could gradually transform a high-risk country into medium risk.Practical implicationsThis study recommends the implementation of publicly accessible ownership registries to address the issues around secrecy, transparency and auditing misconducts. Additionally, the general strengthening of laws and policies in these three domains is also necessary alongside the application of current technologies, such as machine learning, for the detection of money laundering.Originality/valueThe authors believe this study uses advanced econometric techniques rarely used in the literature on money laundering. Separating the impact of economic and social/regulatory is also valuable

Cultural barriers in China's corporate loans

This study uses listed companies and dialect data to examine how dialect diversity affects corporate unsecured loans. Through our analysis, we find that dialect diversity significantly reduces corporate unsecured loans. Mechanism analyses show that language barriers and social trust are external environmental mechanisms, while corporate transparency and overdue are internal mechanisms. Heterogeneity analyses indicate that corporate risk and asset intensity can increase the negative effect of dialect diversity. In addition, the effect of dialect diversity is only significant in groups with low financial development, low marketization, and high market segmentation. Furthermore, the negative effects of dialect diversity on corporate unsecured loans ultimately increase the burden on enterprises and their financial expense ratios. We provide a new perspective on the determinants of corporate collateral. Suggestions to reduce corporate unsecured loan constraints are provided at the end of this paper.

How does transparency into global sustainability initiatives influence firm value? Insights from Anglo‐American countries

AbstractCorporations use global sustainability reporting principles, certifications, guidelines, and indices to promote corporate transparency. However, the effectiveness of adopting these global transparency approaches, either separately or collectively, in increasing firm value is as yet unclear. Thus, we examine whether different global transparency approaches engender different outcomes related to firm value and whether adopting a comprehensive or integrated global transparency approach could better enhance firm value. We use a sample comprising 6978 firm‐year observations of firms listed in the United States (S&P 500), Canada (S&P‐TSX 221), and the United Kingdom (FTSE 350) from 2013 to 2019. A fixed‐effects regression model is then used to examine the primary associations in this study. This technique was complemented by a two‐step dynamic generalised method of moment (GMM) model to overcome the expected endogeneity concerns. Our findings indicate that adopting global sustainability reporting principles, certifications, and an integrated global transparency approach is positively attributable to the market value of firms. In contrast, firms' adoption of international guidelines and environmental, social, and governance (ESG) ratings cannot predict the firm value in the study context. Our evidence implies that firms' adoption of an integrated global transparency approach adds the most value to those firms when compared with adopting a standalone transparency approach across the three sampled countries. Our study provides practical implications for policymakers and corporate managers and suggests avenues for future studies to build upon our findings.

Editorial: The Court of Justice of the European Union and the beginning of the end for corporate transparency?

Editorial: The Court of Justice of the European Union and the beginning of the end for corporate transparency?