Corporate Voluntary Disclosure Research Articles

A Cost-Benefit Analysis of Mandatory and Voluntary Corporate Disclosure

Disclosure is important for corporate financing and business activities, as explained by Signalling Theory and Principal-Agent Theory. Corporate disclosure can be divided into voluntary and mandatory. Driven by the pursuit of maximising economic benefits, companies are motivated to opt to disclose voluntarily, notwithstanding the self-interest of managers and the dilemma of free-riding reduces the incentives and role of such disclosures. This inherent limitation of voluntary disclosure mechanisms has catalysed the widespread adoption of mandatory disclosure requirements. However, a simplistic discussion of the advantages and disadvantages of voluntary versus mandatory falls short of providing a conclusion. To address this gap, this study incorporates a cost-benefit analysis framework from law and economics. The effectiveness of mandatory disclosure, conceptualized as a form of governmental intervention in economic activities, hinges on the balance between its implementation costs and the derived benefits. The value of mandatory disclosure is related to regulatory effectiveness, which in turn influences the costs borne by companies in meeting disclosure requirements and the challenges faced by investors in utilising disclosed information.

Board gender reforms and voluntary disclosure: International evidence from management earnings forecasts

AbstractResearch Question/IssueThis study examines the relationship between boardroom gender diversity reforms (BGDRs) and corporate voluntary disclosure in the form of management earnings forecasts (MEFs) in a sample of 43 countries over the period 2000 to 2020.Research Findings/InsightsTaking advantage of the staggered adoption of the gender diversity reforms that aim to improve women's representation on boards, we find that firms exhibit a greater propensity for and frequency of issuing MEFs. These findings hold for both governance‐based and legislation‐based reforms but are stronger for the latter. Furthermore, we find stronger results (a) when female directors possess higher financial expertise and serve on board sub‐committees, (b) when board activity (meetings and attendance) improved following BGDRs, (c) for firms that had all‐male boards before the reforms and where gender diversity increased shortly after the reforms, and (d) for countries with greater legal enforcement and gender equality. Our findings are robust using the stacked difference‐in‐differences approach and alternative samples, models, and fixed effects. In addition, we find that, after the reforms, there is an increase in the forecast horizon, forecast width, bad news disclosure, accuracy, and the number of disaggregated forecast items.Theoretical/Academic ImplicationsOur study provides the first international and comprehensive evidence of the positive role of board gender reforms in the corporate information environment and offers vital policy implications.Practitioner/Policy ImplicationsOur study informs the ongoing debate regarding the effectiveness of and business case for gender diversity reforms. By documenting a causal link between BGDRs and voluntary disclosure, our study provides important implications for policymakers, regulators, investors, and top management teams.

Voluntary Corporate Disclosures and Tangible Brand Elements in Financial Advertisements for Consumer Buy-in: A Study on Malaysian Unit Trusts

This study aims to explore the appeal of voluntary corporate disclosures in advertisements for unit trust schemes (UTS). Purposive sampling was used to recruit 25 Malaysian working adults aged between 20 to 70 years old as respondents. In-depth interviews were conducted via Zoom for an average duration of 60 to 90 minutes. Interviews were audio recorded and transcribed for thematic analysis. Findings showed that tangible brand components, namely logo, color schemes, typeface, and names which appear in financial advertisements, create brand awareness through key themes such as easy recognition, credibility, association, confidence, and familiarity. Financial advertisements in the media are important to create brand recognition, recall and familiarity. Brand awareness and attitude are vital in advertising financial products for eventual buy-in, especially among consumers. Brands should be recognized, remembered, and viewed positively in any type of unit trust advertising. The major deciding factor for brand awareness, attitude and purchasing decision is corporate voluntary disclosure. Financial products are pre-conceived as risky and require careful examination of trustworthy corporate tangible brand elements contained in an advertisement. Negative internal motivation among potential investors requires more reliable corporate information, including celebrity endorsements and fees charges. In fact, positive motivation for trust can be enhanced when celebrities and testimonials are involved, whereas fees charged is not crucial. This study intends to provide policy makers insights into persuading consumers to buy-in and invest in unit trust via appropriate corporate advertising strategies to target audience for effective advertising. Keywords: Trust, motivation, voluntary corporate disclosure, advertising, unit trusts.

The Impact of Corporate Voluntary Disclosure and Financial Leverage on The Relationship Between Corporate Governance and Shareholders' Value: Proposed Framework

Objective: The purpose of this study is to propose a conceptual framework that investigates the impact of corporate governance practices on shareholder value.   Theoretical framework: The proposed framework of this study is established based on agency theory and stewardship theory to establish the interrelationships among the models in this study.   Method: In line with previous research, corporate governance practices have been shown to improve information disclosure through voluntary disclosure.   Result and conclusion: This leads to maximizing the shareholders' value, as discussed in this paper. Financial leverage as a moderator factor is found to be a potentially significant factor in strengthening the effect of voluntary disclosure of information on the shareholders' value.   Conclusion: Corporate governance practices play a pivotal role in enhancing shareholder value, especially when considering the influence of voluntary disclosure and the moderating effect of financial leverage.   Originality/Value: The unique contribution of this research lies in its comprehensive analysis of the relationships between corporate governance practices, voluntary information disclosure, financial leverage, and their combined influence on shareholder value.

Managerial extraversion and corporate voluntary disclosure

AbstractThis article examines the effect of managers' personality trait of extraversion on the voluntary disclosure of their firms. Our results from analyzing archival data from Sweden show that the extraversion scores of CEOs and CFOs obtained from psychological tests are positively associated with the voluntary disclosure scores of their firms. The effect of managerial extraversion on disclosure is, moreover, stronger when managerial discretion or managerial job demands are higher. We also find that extraversion affects managers' disclosure styles during earnings conference calls.

The Spillover of Shareholder Litigation Risk and Corporate Voluntary Disclosure

In this study, we instigate whether firms proactively change their voluntary disclosure in anticipation of the spillover of their peer firms’ litigation risk. We find that focal firms facing greater ex ante spillover litigation risk reduce disclosure activities by lowering both the likelihood of issuance and the frequency of management earnings forecasts. We then show that the effect is robust and unlikely driven by some omitted correlated variables using an alternative ex ante litigation risk measure that is not related to firm characteristics. We further demonstrate that the effect is likely causal using a difference-in-differences design where an unanticipated court ruling significantly reduces certain firms’ exposure to peers’ litigation risk spillover. The results from cross-sectional analyses are also consistent with ex ante litigation risk driving the negative relation.

Framing as a strategy for defending the perceived authenticity of voluntary environmental disclosure in the digital era

AbstractIn the digital age, to attract readers' attention, environmental activists may change the way corporate environmental information is reported and reinterpret it in social media. This paper aims to discuss how firms protect the perceived authenticity of their environmental disclosure. This study suggests that framing enables firms to clarify the disclosure focus for their readers in the information‐overload context. We propose five framing strategies and evaluate their effects on the stigmatized categorization, attribution, and diffusion of environmental information. By doing so, we add framing strategies to the managerial toolkit available for protecting the perceived authenticity of corporate voluntary environmental disclosure.

The influence of information asymmetry on the interaction between voluntary corporate disclosure and cost of equity: evidence from publicly traded Indian enterprises

PurposeThe purpose of this paper is to investigate whether information asymmetry mediates the relationship between disclosure and cost of equity.Design/methodology/approachThe study is based on a sample of 500 companies listed in Bombay Stock Exchange for a period of six years from 2015 to 2021. Panel data regression is applied to analyze the relationship between voluntary disclosure, cost of equity and information asymmetry. Mediation effect of information asymmetry is tested with the help of Barron and Kenny’s (1986) approach.FindingsFindings suggest that in case of Indian companies, disclosure reduces cost of equity directly and indirectly through mediation of information asymmetry. Indian investors value credible information for better estimation of future returns, supporting the validity of estimation risk and stock market liquidity hypothesis, which proposes an inverse relationship between disclosure and cost of equity.Research limitations/implicationsManagers can use the findings to strategize their disclosure policy and secure funds at lower cost. Shareholders can monitor managerial actions by demanding credible disclosures. Government too can encourage voluntary disclosure by providing special incentives to the firms.Originality/valueThis study is a pioneering research that investigates the mediating influence of information asymmetry between disclosure and cost of equity with reference to the Indian corporate landscape.

Chief Executive Officers Dynamics And Corporate Voluntary Disclosures in Nigeria and South Africa

This study investigated the effect of Chief Executive Officers Dynamics on voluntary disclosure of selected industrial goods firms in Nigeria and South Africa. Corporate social responsibility was used as dependent variable while chief executive officers’ tenure, chief executive officers’ age, chief executive officers’ experience, were used as independent variables. A sample of 26 quoted industrial goods firms from two African countries (Nigeria and South Africa) was used for the period of ten years spanning 2012 to 2021. The study employed ex-post facto and longitudinal research design. The secondary sources of data were collected from annual reports and seven (3) specific objectives and hypotheses were subjected to some preliminary data tests like descriptive statistics, Pearson correlation analysis, Variance inflation factor, histogram normality tests and were tested using binary logit least regression analysis. Using a sample of 260 from two African countries firm-year observations, the result revealed that chief executive officers tenure and chief executive officers experience has positive and significant effect on voluntary disclosure practices which was statistically significant at 1% and 5% levels of significance respectively while, CEO Age was found to have negative and insignificant effect on voluntary disclosure practices. Based on the findings made, the study recommends among others that quoted industrial goods firms in Nigeria and South Africa should ensure that the long tenure of CEOs should be encouraged among Nigeria firms while the maximum three years of CEO tenure should be discouraged among South Africa firms and it should be backed up by law and strictly enforced. Again, the study recommend that management of industrial goods firms in Nigeria and South Africa should Long tenure of CEOs should be encouraged among Nigeria firms while the maximum three years of CEO tenure should be discouraged among South Africa firms and it sho

The impact of executives' compensation and corporate governance attributes on voluntary disclosures: Does audit quality matter?

PurposeThis article investigated whether the executives' compensation and corporate governance attributes are aligned with stakeholders' demands for higher corporate voluntary disclosures. Moreover, the study also examined the moderating role of the auditor's reputation in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures.Design/methodology/approachThe study used a sample of S&P BSE index constituents' 90 Indian firms for 2017–2019. The voluntary disclosure scores were fetched from the India Disclosure Index Report published by FTI Consulting. This analysis was carried out in two parts by applying four panel-data regression models in the agency and signalling theories framework. First, the study examined the association between executive compensation, board strength, composition, gender diversity, and voluntary disclosures. Second, the article investigated the moderating role of the “Big 4” in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures.FindingsThe willingness of executives to share private information with stakeholders depends on the compensation they receive from their employer. The higher compensation paid to executives leads to a higher “tone from the top,” which is better aligned with stakeholder interests. Further, the research also found that bigger board sizes, a higher proportion of independent and woman directors (indicators of good governance), and an auditor's reputation are associated with increased voluntary disclosure.Research limitations/implicationsThe findings showed that the executives' compensation and corporate governance attributes are aligned with stakeholders' demand for higher voluntary information from firms. Moreover, the study also found that the “Big 4” play a moderating role in this direction. The choice of a reputed auditor indicates the firms' long-term positive future perspectives, which strengthens investor confidence in the financial market.Practical implicationsThe study suggests that fair executive compensation can address the agency problem.Originality/valueThis research furnishes managers and different stakeholders with significant implications of executives' compensation, corporate governance, and auditor's reputation in the best interests of a firm through reducing potential risks of information asymmetry.

Strategy disclosure and cost of capital: The key role of women directors for family firms

This paper investigates whether and to what extent strategy disclosure influences the cost of capital, comparing family and non-family firms and considering the proportion of women directors. We theorize that voluntary strategy disclosure may be either beneficial or detrimental depending on the perceptions by financial stakeholders about the role of governance attributes. These stakeholders might, indeed, assess strategy disclosure differently based on their stereotyped view of the family firm status and women’s involvement on the board of directors. By referring to a sample of 93 listed Italian small and medium-sized enterprises, we show that, unlike with their non-family counterparts, strategy disclosure increases the cost of capital for family firms. However, an increasing proportion of women directors softens this negative effect. Moreover, when a critical mass of women directors is appointed to the board, the strategy disclosure becomes beneficial for family firms too. We consequently offer a threefold contribution to the literature on gender diversity, family business and corporate voluntary disclosure.

Publication trends in the Journal of International Financial Management and Accounting: A retrospective review

AbstractThis study uses bibliometric analysis to assess Journal of International Financial Management & Accounting (JIFMA's) evolution between 1989 and 2021. In this retrospective review, we investigate the journal's performance, authorship trends, and intellectual structure. The journal's international focus is primarily on cross‐country studies and the effects of country‐level factors on various accounting and finance outcomes. The collaborative network of JIFMA's authors has also grown substantially consistent with rise in research collaboration in general across the world. We identify nine major themes making up JIFMA's knowledge structure: (1) value relevance of accounting information relating to the adoption of International Financial Reporting Standards, (2) voluntary corporate disclosure, (3) corporate use of financial derivatives, (4) corporate governance, (5) equity valuation, (6) stock return seasonalities, foreign equity ownership, and cost of capital, (7) earnings announcements and pecking order behavior, (8) triple‐bottom‐line disclosures, and (9) managerial ownership and earnings management. Our findings will likely benefit JIFMA's editorial board and other journal stakeholders including future researchers.

DETERMINANTS OF VOLUNTARY DISCLOSURE: EMPIRICAL ANALYSIS OF PUBLIC LISTED ENTITIES IN INDONESIA

This experimental research explored the association between corporate governance mechanisms and the quality of voluntary corporate disclosure. Corporate governance structures encompass of the ownership structure, the effectiveness of the audit committee, and the quality of external auditors. The used technique of research is a quantitative methodology. The main emphasis of the study are the annual reports of public companies listed on the Indonesia Stock Exchange (IDX) between 2017 and 2021. In addition, the primary website of the stock market, www.idx.co.id, and issuer websites are reviewed for secondary data. The method of data analysis employed is panel regression analysis. 817 firms from all sectors of the Indonesia Stock Exchange make up the sample population generated by stratified sampling. The findings of this study indicate that the audit committee size and the age of the company incur impact on the voluntary disclosure of Indonesian issuers. On the other hand, it has been established that the structure of foreign ownership in Indonesia degrades the quality of voluntary disclosure. Also, research reveals that the audit quality of external auditors cannot consistently influence the company's information sharing. This report provides an overview of the quality of voluntary disclosures made by issuers in Indonesia. In addition, this study includes information on the drivers of voluntary disclosure that must be improved to increase stakeholders' competitiveness and trust.

Managerial Extraversion and Corporate Voluntary Disclosure

Managerial Extraversion and Corporate Voluntary Disclosure

Ownership Structure and Voluntary Disclosure among Nigerian Listed Non-financial Firms

Investors are concerned with the disclosure of information by management of firms to make relevant and timely decisions, therefore, this study investigates the influence of ownership structure on corporate voluntary disclosure of listed non-financial firms in Nigeria. The population of the study consists of all nonfinancial listed firms on the Nigerian Exchange Group. Using purposive sampling technique, the study selected a total of 67 listed non-financial firms having the required information necessary for the study between year 2011 to 2020. The study employed the dynamic panel Generalised Method of Moment (GMM) technique to analyse the data. The system GMM results revealed that block and institutional ownership exert positive significant influence on the disclosure of voluntary information by listed non-financial firms in Nigeria while the impact of managerial ownership was positive but not significantly associated with corporate voluntary disclosure.

Industry Competition, Corporate Governance, and Voluntary Disclosure of Greenhouse Gas Emissions Information: Evidence from South Korea

This study investigates the relationship between industry competition and managers' voluntary disclosure policies and examined how the corporate governance structure affects this relationship in South Korean companies. The fiercer the competition within the industry to which the company belongs, the higher the incentive for managers to perform strategic actions to improve their competition status. This increase in the strategic incentives of managers can be seen through voluntary disclosure policies. The empirical results of this study are as follows. First, it was found that there was a negative relationship between the degree of industry competition and the level of voluntary disclosure of greenhouse gas emissions information. This means that managers perform less disclosure to maximize the value of the company because the more competition within the industry intensifies, the higher the proprietary cost of disclosing information on greenhouse gas emissions information. Second, it was found that the corporate governance structure weakened the relationship between the degree of industry competition and the level of corporate voluntary disclosure. These results can be interpreted as that a good governance structure supports such managers' disclosure decisions because managers are more likely to choose disclosure policies to maximize the value of the company than personal benefits even in the fierce industry competition.

The Effect of Female Personnel on the Voluntary Disclosure of Carbon Emissions Information.

This paper examines the effect of female personnel (female executives and female employees) on corporate voluntary disclosure policy on carbon emission information. The study is motivated from the recent fact that the laws and systems related to female workers are rapidly changing as the social and economic status of women in South Korea has recently improved. In a sample of 9406 firm-year observations over the period from 2014 to 2020, the higher the proportion of female executives, the higher the frequency of voluntary disclosure on carbon emission information. These results are the same even when the female workforce was measured as the proportion of general female employees. Therefore, it can be said that the existence of female personnel at the management and practice level plays a significant role in improving voluntary disclosure quality. By considering the impact of gender manpower composition on enhancing corporate transparency, it provides evidence that market participants can have a positive view on the quality of information environment provided by companies with a high proportion of female personnel.

Theories applied in corporate voluntary disclosure: a literature review

PurposeThis paper attempts to review the corporate voluntary disclosure (CVD) from the theoretical perspective as well as propose a conceptual framework.Design/methodology/approachThe researchers use structural literature review technique. The sample literature consisting of 55 articles was extracted from the Scopus database over the period of 2017–2021.FindingsThe literature observes that the legitimacy, agency and stakeholder theories are most applied in CVD related studies than the other theories. It is also revealed that researchers need to concentrate more studies on those theories of CVD that have been applied in a limited study such as neo-institutional, signaling, resource dependence, political economy and impression management theories.Practical implicationsThe findings can help the understanding of parties such as practitioners', regulators and potential investors of the theories in CVD from a combined and comprehensive view.Social implicationsThe results of the study offer new insights into the potential impact of organizational level and country level theories in CVD from different perspectives of developed and developing countries.Originality/valueThis study delivers an inclusive literature review of the current study approach on the theories of CVD and highlights some stimulating guidelines for future study.

Cross‐border regulatory enforcement and corporate voluntary disclosure

AbstractIn this study, we find that foreign firms cross‐listed in the US issue significantly more and better‐quality management earnings forecasts after their home countries sign the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU), a nonbinding arrangement established by the International Organization of Securities Commissions to enhance the cross‐border enforcement of securities laws. Specifically, we find that after the MMoU, relative to their domestic counterparts in the US, foreign firms cross‐listed in the US are not only more likely to issue management earnings forecasts but also issue them more frequently. They also tend to issue better‐quality earnings forecasts, as measured by lower surprise, higher precision, greater timeliness, more disaggregation, lower optimism and fewer errors. We find that the observed effects of the MMoU signing are stronger for cross‐listed firms from countries with weaker institutional environments, resulting in greater enforcement concerns after the MMoU, and for firms with less foreign institutional ownership before the MMoU. Collectively, our findings support the conjecture that after a US‐listed foreign firm's home country enters the MMoU, the firm has more incentives to engage in voluntary disclosure due to greater concerns about regulatory enforcement and increased information demand from investors.

Capital market liberalisation and voluntary corporate social responsibility disclosure: Evidence from a quasi‐natural experiment in China

AbstractThis paper investigates the impact of the Shanghai–Hong Kong Stock Connect (SHSC) scheme on voluntary corporate social responsibility (CSR) disclosure in China. Using a difference‐in‐differences (DiD) design, we find that companies that participate in the SHSC scheme are more inclined to voluntarily issue CSR reports. This effect is more pronounced for companies that have limited access to international markets and those with weak corporate governance. Additional analyses show that SHSC‐connected firms also produce higher quality CSR reports and achieve a better CSR performance. Our findings imply that capital market liberalisation promotes voluntary corporate disclosure for investors.