Disclosure In Annual Reports Research Articles

Corporate Governance and Corporate Social Responsibility Society Disclosure: The Application of Legitimacy Theory

It is important for companies to adhere to society’s values by engaging in corporate social responsibility activities to remain legitimate, which in turn, translated into disclosures in annual reports. Corporate governance mechanisms have been used as explanatory factors in determining the level of disclosures. This paper aims to determine the influence of corporate governance mechanisms on the society disclosure in Malaysian companies’ annual reports using the legitimacy theory. The level of society disclosure is examined against the Modified Society Disclosure Index (MoSDI), which was developed based on the society indicatorof Global Reporting Initiative Version 4.0, preliminary observation on the 2016 NACRA winners’ annual reports and past literature. The analysis involved 234 top Malaysian companies’ annual reports from 2014 to 2016. The results found that audit committee, independent directors, and size are significantly associated withthe level of society disclosure. By complying with good corporate governance practice, awareness can be raised and preventive measures can be taken in addressing society’s issues through proper society disclosure.The legitimacy gap can be reduced via the society disclosure.

Annual report disclosure timing and stock price crash risk

We study the relationship between firms' annual report disclosure timing and their future stock price crash risk. Using a sample of Chinese listed firms from 2001 to 2017, we find that firms switching their annual report disclosure timing from high to low market attention periods are associated with greater stock price crash risk in the future. This finding is robust when alternative stock price crash risk proxies are used and when the concern of omitted variables and selection bias are addressed. This effect is more pronounced in firms whose insiders face more personal costs for disclosing bad news and firms with weaker internal or external governance mechanisms that constrain the firm's tendency to conceal bad news. In summary, we find that firms hide bad news by strategically disclosing their annual reports during periods of low market attention, which in turn increases future stock price crash risk.

Environmental Disclosure and Financial Performance of Firms in Kenya: A Stakeholder Approach

Using panel data analysis this study examined the influence of environmental disclosure in annual reports on financial performance of companies listed on the Nairobi Securities Exchange in Kenya. Environmental disclosure information was collected using quantitative content analysis for the period 2007–2015 while financial performance data was collected for the period 2008–2016, a one-year lag behind the environmental disclosure data. Control variables were firm size, industry type and leverage. Environmental disclosure was found to be statistically significantly positively related to the firms’ return on assets but not statistically significant with return on equity and Tobin’s Q. The overall results suggest that disclosing environmental activities neither improves financial performance nor deteriorates it. Keywords: Environmental disclosure; Financial performance; Developing country; Kenya; Panel data DOI: 10.7176/RJFA/11-14-07 Publication date: July 31 st 2020

REPORTING DISCLOSURE LEVELS AND COMPLIANCE WITH BB, AAOIFI, B/IFRS AND SEC OF ISLAMIC FINANCIAL INSTITUTIONS IN BANGLADESH

Compliance with financial reporting guidelines/standards promulgated by Regulatory Bodies has become a crucial issue of the day after a series of corporate debacles over a few years. Regulators, professional bodies and researchers throughout the world have expressed their concern about the need for improved accounting pronouncements and compliance for providing better information than previously required for the preparation and presentation of corporate financial reporting. The present study primarily focuses on the reporting disclosure levels and compliance with Bangladesh Bank (BB) Guidelines, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Standard, Bangladesh/International Financial Reporting Standard (B/IFRS) and Securities and Exchange Commission (SEC) Rules of Islamic Financial Institutions in Bangladesh. Annual reports of (08) eight Islamic banks in Bangladesh have been examined for the year ending 2015. The results showed that the Islamic banks significantly followed the selected accounting guidelines/standards under review and did bring remarkable changes in the financial reporting practices made by the Islamic banks in Bangladesh. The study attempted to examine empirically the levels of disclosure in corporate annual reports of Islamic banks in Bangladesh. The study recommended increasing the level of compliance to make their financial reports more informative. The study also tries to ascertain the regulatory necessary requirements in preparing the financial statements of banks under Islamic shariah and tries to display the compliance status of these banks with legislations. The average compliance rate is 93.28% for BB guidelines, 46.54% for AAOIFI Accounting Standard, 48.50% for B/IFRS and 51.99% for SEC rules considering all required aspects of financial reports. Compiling all of the requirements regarding financial reports of regulatory bodies will be helpful for banks to make financial reports convenient.

THE IMPACT OF FIRM CHARACTERISTICS ON THE LEVEL OF VOLUNTARY DISCLOSURE:

This study aims to examine the impact of some bank characteristics (age, size, profitability and leverage) on the extent of voluntary disclosure in annual reports of listed banks in Borsa Istanbul. All (13) listed banks represent the sample of the study. The study adopted the deductive approach by developing hypotheses based on the relevant theories and results of prior studies. The study also applied the panel data strategy to analyze the collected data from annual reports across five years (2013-2017). The results indicated that there is a positive relationship between each bank characteristic (age, size, profitability and leverage) and the level of voluntary disclosure. The results also show that profitability has a big impact on the level of voluntary disclosure followed by leverage, whereas, age and size have a small effect.

Human Resource Disclosures in Corporate Annual Reports of Insurance Companies: A Case of Developing Country

Employees are key stakeholders for companies to maintain their sustainability. Obtaining and disclosing information related to employees can help companies to manage and evaluate the effectiveness of human resources. This paper investigates human resource disclosures in corporate annual reports of 54 insurance companies in Turkey and identifies the determinants of the disclosure for the period of 2007–2017. For this purpose, human resource disclosures with eight subdimensions as employee health and safety, employment of minorities or women, disabled employee, employee training, employee assistance and benefits, employee remuneration, employee profiles and employee morale were obtained from corporate annual reports by content analysis. The data were statistically tested with correlation analysis and a pooled OLS (Ordinary Least Squares) models to determine the effects of return on assets, return on equity, leverage, firm size, number of employees, age of firm, public listing status, foreign ownership, company type on these disclosures. The results indicate that number of employees, foreign ownership and company type have an effect on the extent of human resource disclosure. Employee training is the most disclosed item among human resource disclosures in corporate reports. It is suggested that companies should improve their reporting and disclosure practices related to human resource development.

The Association between Board of Directors’ Characteristics and the Level of Voluntary Disclosure: Evidence from Listed Banks in Borsa Istanbul

The main aim of this study is to investigate the association between some board of directors' characteristics (board independence, board size, board meetings and role duality) and the level of voluntary disclosure in annual reports of listed banks in Borsa Istanbul. The deductive approach was adopted by developing hypotheses based on previous studies' relevant theories and findings. Also, the panel data strategy was applied to analyze the collected data from annual reports across five years (2013-2017). The univariate statistical analysis and the multivariate Feasible Generalized Least Squares regression model are used in this study. The results showed that board independence, board size and board meetings were positively and significantly associated with the level of voluntary disclosure, whilst role duality was negatively but not significantly associated with voluntary disclosure. The results also indicated that all bank characteristics were positively and significantly associated with the level of voluntary disclosure. Most prior studies on voluntary disclosure practices have been undertaken in developed countries, and a few of them have focused on voluntary disclosure practices in the banking sector for a number of years (longitudinally). There is a requirement for more empirical studies in this area to confirm or disprove the previous results. This study will add value to the knowledge in the disclosure literature by clarifying the relationship between the board of directors' characteristics and voluntary disclosure in the banking sector of developing countries.

Does competitive position of a firm affect the quality of risk disclosure?

This paper investigates the impact of competitive position of the firm on the quality of risk disclosures in annual report. We develop a composite measure as a proxy for quality of disclosures by factoring in both the quantity of disclosure and the semantic attributes, namely, nature, time-orientation and tone of disclosure. In the backdrop of a unique natural setting that Indian regulatory environment offers, we use a sample of more than 4000 annual reports covering a 10-year period from 2005 to 2015 and employ a system-GMM regression to address the problem of endogeneity to find that firms that have an advantageous competitive position provide more comprehensive disclosures. In sharp contrast to the tenets of proprietary cost hypothesis that due to associated disclosure costs firms lose their competitive advantage and hence shy away from disclosure, we find that companies that fare well in product markets signal their strengths through enhanced disclosure to maintain their legitimacy and stakeholders' confidence. Further analysis reveals that firms with sound industry position tend to be transparent on a higher number of risk items. This study makes a unique contribution to the literature by examining an unexplored strategic dimension- firm's competitive position- as a deterrent or inducement to risk disclosure. Accordingly, the results have policy implications for various jurisdictions that do not have mandatory disclosure norms and even for those that follow the ‘comply or explain’ approach.

Risk dependence between energy corporations: A text-based measurement approach

Most of the existing studies measure the risk dependence between corporations based on quantitative market data, which is susceptible to interference from market speculative behaviors. This paper innovatively studies the risk dependence between the energy corporations based on their textual risk disclosures in annual financial reports, which can fully reflect their fundamentals and avoid market speculation. The risk dependence between energy corporations is measured by the similarity of the disclosed risk factors faced by them. The empirical analysis discusses the risk dependence of 482 U.S. energy corporations based on the textual risk disclosures of 3,390 10-K filings from 2005 to 2017. The results show that the text-based risk dependence between the energy corporations is informative about their future stock co-movement.

Weather Risk Management in Energy Sector: The Polish Case

The energy sector is perceived as one of the most exposed sectors to the consequences of weather risk both directly (damages of its infrastructure) and indirectly (frictions to the energy supply–demand balance). The main aim of this paper is to provide an insight into the impact of weather risk on economic activity of companies operating in the energy sector in Poland. The empirical objective is to examine whether energy companies: (i) identify their relevant weather risk exposures; (ii) evaluate the impact of weather risk in the cost-revenues dimension; and (iii) implement weather risk management tools, in this case—weather derivatives. In a methodical context, this study relies on a unique research approach and derives from works that examine companies’ risk disclosures in annual reports, by applying textual content analysis. The results indicate that Polish energy companies recognize the impact of weather risk on their performance, also in the cost-revenues dimension. However, although the reported weather risk management methods were diversified, the examined companies did not use weather derivatives to hedge their weather risk exposures. In the overall dimension, the companies leading with the perception and management of weather risk were diversified regarding performance and market size.

STUDY OF CONSISTENCY AND PROFITABILITY THROUGH FINANCIAL RATIO ANALYSIS IN PLANTATIONS INDUSTRY IN SRI LANKA

Purpose - This paper aims to examine financial ratio disclosure in annual reports, and the degree to which the primary ratio components differ between and within the firms, and the stability of ratios over a period of time, moreover the relationship between the companies’ profitability, leverage and liquidity. Design/Methodology/Approach - Out of 297 public listed companies in Colombo Stock Exchange, financial ratios which are presented voluntarily in the annual reports of 18 public listed companies in Plantations Industry in Sri Lanka, from 2013 to 2017 were examined. Findings - Findings indicate that there is a significant variation in financial ratio component composition through firms in Plantations Industry. Further Earnings per Share, Interest Cover and Net Asset per Share are stable over a period of time across firms while Current Ratio, Debt to Equity and Return on Equity are not and that there is a positive relationship between Leverage and Liquidity with profitability in firms. Practical Implications - The significant variation in financial ratio component composition might imply the incompetency of Financial Statement preparers in selection of proper components in calculation of financial ratios and as well might imply the intended manipulation by them through deliberate wrong selection of components. Originality/Value - This paper provides support to those financial analysts and investors who rely much on financial ratios presented in companies’ annual reports. Further identification of factors affecting to profitability of companies will enrich companies with useful information for decision making purpose. KEYWORDS - Financial Ratios; Ratio Analysis; Annual Reports

The effect of risk disclosure on analyst following

ABSTRACT Prior research shows that financial analysts play an important information intermediary role in France. This study extends earlier research to examine the effect of risk disclosure on the number of analysts following listed firms. Using a unique dataset of French firms on the 120 SBF index over 2007−2015, the results show a positive and significant relation between risk disclosure and analyst following, suggesting that firms having greater risk disclosure attract more financial analysts. These findings provide empirical support to the argument that analysts incur lower costs of information gathering in firms with greater risk disclosure. The demand for analyst services is also more valuable in these firms, given their potentially high exposure to risks, implying greater analyst following. Overall, our results are in line with prior literature highlighting that analysts’ activities complement annual report disclosures and, generally, corporate disclosures.

Revisiting Sustainability Disclosure in Annual Reports and Websites: An Empirical Examination from the Banking Industry of Bangladesh

The aim of this study is to determine the current scenario of the disclosure of sustainability in the annual reports and websites of the listed banks in Bangladesh. In this study, the financial year 2019 has been selected (most current at the time of conducting this study) to examine the changes in various aspects of sustainability disclosure over the period of time. It is found that banks disclosed more information in annual reports compared to that of corporate websites. Based on average sentences disclosed, Human Resource Development disclosure is the highest, and Energy consumption and savings related disclosure is the lowest compare to other items disclosed. Based on average sentences disclosed, third-generation banks disclosed more information compared to first and second-generation banks, and conventional banks with Islamic windows disclosed more information compared to sharia-based Islamic banks and interest-based commercial banks. This study also develops a theoretical framework to explain the results.

Corporate Governance and Voluntary Disclosures: A Story about Corporate Transparency from Indonesia

This study examines the impacts of corporate governance attributes on Indonesia Stock Exchange (IDX) listed companies' voluntary disclosures. Year-ending 2012 annual report disclosures of 100 IDX listed companies are analysed using a disclosure index. The results show a low level of voluntary disclosures (25.97%). The regression analysis shows that board size is a positive and significant predictor of voluntary disclosure practices. Agency theory thus partially explains the variability of these disclosure practices. Older companies also provide more disclosures. It is implied that the number of commissioners determines the strength of the board of commissioners in pushing the board of directors to be more transparent. Thus, to be more informed, international investors should invest their money in older companies having a greater number of commissioners.

Financial reporting quality: the case of Czech and German listed companies

The study examines Czech and German listed companies' compliance with selected international financial reporting standards (IFRS) mandatory disclosure requirements. The aim of this paper is to analyse and compare the level of annual report disclosure quality for companies in the Czech Republic and Germany. The proxies for measuring compliance with IFRS mandatory disclosure requirements quantify the range of disclosure of information in the financial statements using the disclosure index. It was proved that the disclosure index of the Czech companies is lower than the German ones. Findings could be useful to potential investors, management and other users of corporate disclosures.

Value Relevance of Corporate Governance Disclosure in Annual Reports: Evidence from Listed Banks in Kenya

This study investigates the value-relevance corporate governance disclosures published in the narrative part of annual reports of ten banks listed at the Nairobi Securities Exchange (NSE) over the entire period from year 2010 to year 2015. This work extends the line of research on value relevance by quantifying narrative accounting, in this case corporate governance disclosures using content analysis. In addition, in line with prior studies, this study employs the Ohlson´s (1995) value-relevance model and finds that corporate governance disclosure is significantly positively related to market value, measured by the average market price per share. The findings reveal that corporate governance disclosures influence investors’ perceptions and are therefore, vital to be included in annual reports, which are a major communication tool.

Analysis of Factors that Influence Mandatory Annual Report Disclosures at The IDX Mining Company

This research aims to examine the influence of company size, company age, ownership structure and profitability on mandatory disclosures of mining company annual reports. The population in this research were all mining companies listed on the Indonesia Stock Exchange in 2013-2017, which were 41 companies. Sample selection was done by purposive sampling method and 14 selected companies were selected. The data used in this research was secondary data by collecting company annual reports from the Indonesia Stock Exchange website, www.idx.co.id. While the analytical method used are classical assumption and hypothesis testing and regression analysis. The results of this study show that the variable company size, company age, and profitability had an influence to mandatory disclosure of annual reports, while the ownership structure had not influence to mandatory disclosure of annual reports. All of independent variable in this research had an influence to mandatory disclosure of annual reports.
 Keyword : Company Size, Company Age, Ownership Structure, Profitability and Mandatory Disclosure.

Sustainability reporting and integrated reporting perspectives of Thai-listed companies

Purpose This paper aims to examine the reporting on sustainability and the level of compliance with international best practice, the Global Reporting Initiative (GRI), aimed at improving communicative value to users. Design/methodology/approach Using a qualitative approach, comprising interviews with senior managers and analysis of disclosures in annual reports of Thai-listed companies, this paper contributes to the literature by providing evidence from an emerging market setting. Findings This study finds that sustainability reporting and integrated reporting perspectives of sampling companies are aiming to satisfy information needs to stakeholders and value creation to external users. Sustainability disclosures are related to some aspect of integrated reporting (IR) principles but not all. Research limitations/implications The findings of this study are based on the results from interviews and annual reports of five business sectors, and may therefore, not reflect the sustainability reporting practices and/or annual reports of other Thai-listed companies. Also, there is limited reporting on future outlook. Practical implications The findings suggest that while sustainability and IR is being adopted very widely, in many countries, there is much variation in reporting practice especially in our emerging country context adopting a “comply or explain” approach. Social implications For the Thai-listed companies, IR systems could be in their early stages and still have long way to go. The results can greatly encourage Thai-listed firms to incorporate integrated information in annual reports based on international standards thus building trust in capital markets and wider society. Originality/value The findings contribute to the literature on sustainability reporting and on the level of compliance with international best practice such as GRI by providing empirical analysis of non-financial disclosures within publicly available reporting in Thailand.

ANALISIS PENGARUH KARAKTERISTIK PERUSAHAAN TERHADAP CORPORATE RISK DISCLOSURE (CRD) (Studi Empiris pada Perusahaan-Perusahaan Pertambangan yang Terdaftar di Bursa Efek Indonesia)

The purpose of this research is to provide empirical evidence about the factors which areinfluence corporate risk disclosure (CRD) in annual report of corporates mining. Corporatecharacteristics used in this research are firm size and leverage companies. Risk disclosure wasmeasured by content analysis-sentence approach. The research data were collected from 160of financial statements and annual reports of corporates mining that listed in Indonesian StockExchanges (IDX) for 2011 until 2015. Theory agency be used in this research to explains therelationship between variables. The analysis method of this research is using multipleregression analysis. The result of this research find that corporate characteristics, firm size,have significant positive effect on corporate risk disclosure (CRD) and leverage companiesdidn’t have significant effect on it.

Do sharia compliance affect Islamic Banks performance? Evidence from Islamic Banks in Indonesia

Sharia compliance is very important for Islamic financial institutions. This study has two objectives, namely to determine the level of sharia compliance in Islamic banks in Indonesia, as well as to prove whether the sharia compliance affects the performance of Islamic banks in Indonesia. To prove this, the researcher observed the annual report of 11 Islamic banks in Indonesia for the period 2012 to 2016. Sharia compliance is measured through the level of sharia governance in Islamic banks. Sharia governance instruments used refer to Hasan (2011). While the performance of Islamic banks is measured by ROA and ROE. Content analysis is used to identify sharia governance disclosures in annual reports. The study revealed that, on average the level of sharia compliance of Islamic bank in Indonesia is at the level of best practice. While the results of statistical tests prove that there is no significant effect sharia compliance on the performance of Islamic banks both measured by ROA and ROE.