Disclosure In Corporate Annual Reports Research Articles

Chief Human Resource Officers and accounting disclosures: Illuminating the firm’s most important asset or window dressing?

Social activism, including movements towards equal pay, gender rights, and racial equality, has heightened public scrutiny, exerting pressure on firms to reassess and reform their human resource practices to ensure they align with current social and ethical norms. Chief Human Resource Officers (CHROs) have a potentially important role in defining and promoting appropriate human resource practices through human resource disclosures in corporate annual reports. We empirically examine the effect of CHROs on expanded human capital resource (HCR) disclosures, recently mandated by the SEC. We find that CHROs have a greater effect on the quality of HCR disclosures when they belong to the top management team, and less so when they belong to groups that are more poorly represented in top management, such as women, racial or ethnic minorities, or non-US nationals, and CHROs holding a liberal arts degree. Jointly considering the characteristics of CHROs, CEOs, and CFOs, we additionally find that pro-democratic political ideology is related to higher quality HCR disclosures. This study contributes to the literature by introducing a generalizable measure of HCR disclosure quality, uncovering significant heterogeneity in HCR disclosure quality across large US firms, and highlighting the role of CHROs in this process. In doing so, this study documents evidence that individual top executives in addition to the CEO and CFO can have a measurable effect on voluntary financial disclosures.

Does CFO accounting expertise matter to corporate social responsibility disclosure in 10-Ks?

PurposeThe study aims to understand the role of accountant in corporate social responsibility (CSR) practice.Design/methodology/approachIn this study, the authors examine whether and how chief financial officer (CFO) accounting expertise and previous work experience influence voluntary CSR disclosure, using textual analysis and natural language processing (NLP) techniques. The authors find that firms' CFOs with accounting expertise disclose more CSR issues in their 10-K reports. Overall, this study provides evidence of the impact of CFOs' professional and personal attributes on voluntary CSR disclosure in corporate annual reports. This study has important implications to investors and policy makers in the context of CSR disclosure regulations in annual reports.FindingsOverall, this study provides evidence of the impact of CFOs' professional and personal attributes on voluntary CSR disclosure in corporate annual reports. This study has important implications to practitioners and policy makers in the context of CSR disclosure regulations in annual reports.Research limitations/implicationsThere is an inherent limitation of textual analysis as the tool tries to read key words from the text.Practical implicationsThis finding is useful for policy maker and investors as CSR is known to have impact on the share price.Originality/valueThis paper is the first attempt to find out accountants' role in CSR activities, which has not been examined in the prior literature.

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.

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.

Disclosure of Corporate Social Responsibility (CSR) Through Company Characteristics at Company Listed on LQ45 Indonesia Stock Exchange (IDX)

In the era of globalization, environmental awareness has brought about changes in attitudes towards profit orientation of the social orientation of the company. Management as the agent cannot avoid the reality of the impact of corporate activity that not only generates profits / raise stock prices, but also has environmental impacts such as damage to ecosystems, pollution, and so forth. The purpose of this study was to analyze the influence of firm characteristics on corporate social responsibility disclosure in corporate annual reports in Indonesia. The populations in this study are 10 companies listed in the LQ45 index of the Indonesia Stock Exchange (IDX) with the research period of 2011 until 2015 and meet the criteria established. Analysis of the Data used is multiple linear regressions. The results of this study indicate that public ownership, liquidity, and firm size have no significant effect on corporate social responsibility disclosure. Meanwhile, leverage and profitability have a significant effect on corporate social responsibility disclosure.
 
 Keywords: corporate social responsibility disclosure, public ownership, leverage, liquidity, profitability, and firm size.

PENGARUH PROFITABILITAS, UKURAN PERUSAHAAN DAN KINERJA LINGKUNGAN TERHADAP CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE BERDASARKAN INDIKATOR GLOBAL REPORTING INITIATIVE (GRI) PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

Corporate Social Responsibility (CSR) is a transparent business practices, which are based on ethical values, by giving attention to the employees, society and environment, and designed to meet the wishes of shareholders and also society in general. This research is based on the belief (ontology) that CSR is a form of responsibility-oriented businesses in the fulfillment of public expectations concerning the existence of a company's business in the hope of obtaining legitimacy from the public. This study is a research conducted on manufacturing companies in Indonesia. The purpose of this study was to determine the factors that affect the disclosure of CSR in the annual reports of manufacturing companies in Indonesia. The data used total 18 companies that are listed in Indonesia Stock Exchange 2014-2016 or 90 firms-years. The sample is obtained by using purposive sampling method. Data collection method used was content analysis of social disclosures in corporate annual reports. Content analysis was conducted using a check list of items of social disclosure in corporate annual reports. Statistical method used is a multiple regression with eviews 9.0. The result of this study indicates that CSR disclosure practices as a field of coverage is significantly influenced by company size and environmental performance. Other factors examined in this study, such as profitability did not affect CSR disclosures made by companies.

Towards Sustainable Development in the Arab Middle East and North Africa Region: A Longitudinal Analysis of Environmental Disclosure in Corporate Annual Reports

AbstractThis paper presents the first comprehensive analysis of corporate environmental disclosure in the Arab Middle East and North Africa region. Using a detailed research instrument containing 55 items, content analysis of the annual reports of 180 non‐financial companies listed on nine major stock markets was conducted over a 5‐year period. The calculation of an unweighted disclosure index indicates that, although the level of disclosure might be considered relatively low by international standards, it varies by country. Perhaps of greater significance for the future of sustainable development in the region, disclosure is shown to have increased significantly over the period 2010–2014. Further analysis shows that although there are some differences relating to categories of disclosure, this is a region‐wide phenomenon not driven by a subset of countries or types of company. This benchmark study provides a systematic picture for policy‐makers in the region and, for future researchers, both substantive findings and methodological insight. © 2017 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd

Stakeholders’ Views on Voluntary Human Capital Disclosures in Corporate Annual Reports of Top Bangladeshi and Indian Listed Companies

Anchored in stakeholder theory, the study aimed at examining the extent of voluntary human capital disclosures in annual reports of top 20 Bangladeshi and Indian listed companies. In addition to qualitative content analysis of the annual reports for the year 2010–2011, this study also conducted a series of in-depth interviews with a range of stakeholders of the companies of both the countries to understand their views on voluntary HC disclosures in corporate annual reports. It was found that the level of voluntary HC disclosures was very low in case of the companies of both the countries. Moreover, it was observed that HC disclosures of companies mostly composed of positive information. From the views of stakeholders, it was evident that stakeholders unanimously recognized the necessity of credible HC disclosures in corporate annual reports. The HC disclosure index framed in this study may be useful in developing a South Asian model of corporate HC disclosures. This study contributes to the existing literature on HC disclosures where there has been a distinct lack of engagement-based research works.

Social and Environmental Disclosure in Corporate Annual Reports: Evidence from Kuwait

With the lack of empirical research in voluntary disclosure in the Middle East area, the present study aims at investigating and evaluating corporate social and environmental disclosure (CSED) practices in Kuwait. To achieve this objective, a checklist of 25 social and environmental disclosure items was developed. These items were then classified into four categories: human resources, environmental activities, community involvement and product/service related information. Using content analysis, the 25 disclosure items were applied to the annual reports of a sample of 43 companies listed in Kuwait Stock Exchange (KSE). It was found that the overall disclosure level for the sample companies is 21%. The disclosure level varies by disclosure category. Product/service related information achieved the highest disclosure level (43%), while human resources disclosure comes second (25%). Little attention was given to disclosing information related to community and environment, with a disclosure level of 16% and 8% respectively. These results suggested that there is a significant scope for additional social and environmental disclosure in the annual reports of Kuwaiti companies. Issuing regulations and guidelines on CSED is needed to motivate Kuwaiti companies to improve their social and environmental disclosures.Int. J. Soc. Sci. Manage. Vol-3, issue-1: 8-16

Corporate governance and intellectual capital disclosure. An empirical analysis of the Italian listed companies

Intellectual capital (IC) as well as disclosure of information on IC has in recent years gained importance. IC is the key issue in strengthening a firm’s competitive position and in achieving its objectives. The purpose of this study is to investigate some determinants of the disclosure of IC in annual reports. In particular the aim of this research is to analyse the internal mechanisms of corporate governance (board composition, role duality, ownership structure, auditor type and size of audit committee), which influence the intellectual capital disclosure in corporate annual reports for a sample of all listed Italian firms at 31st December 2010. It has been used a disclosure index as a dependent variable, (ICD), and the method used to measure it is content analysis.

Derivatives disclosure in corporate annual reports: bank analysts' perceptions of usefulness

Responding to mixed evidence on the decision-usefulness of annual report disclosures for derivative financial instruments to capital market participants, and concerns identified by practice, this paper examines usefulness in a direct study of user perceptions. Interviews with analysts from Australia's four major banks reveal essential usefulness, limited by the disclosures' failure to reflect companies' actual use of derivatives throughout the period, and inability of users to understand companies' off-balance sheet risk and risk management practices from information considered generic and boilerplate. The research complements and extends existing archival and survey research and provides new evidence suggesting low-cost ways for increasing usefulness. It supports the International Accounting Standards Board's disclosure recommendations in its recent Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, but, at the same time, highlights that for these proposed measures to be successful in relation to IFRS 7, they may need to address other issues. The research increases knowledge of the informational requirements of lenders, an important class of financial information user, and supports calls from practice for companies to improve their disclosure of material economic risks.

The Impact of Corporate Environmental Disclosures and Audit Committees on Environmental Reputation

We examine the impact of the volume and quality of environmental disclosures in corporate annual reports on the creation and sustenance of firms’ reputation for environmental responsibility, and the extent to which these effects are enhanced by the quality of audit committees. Using a sample of UK FTSE350 companies from 2007-2011, we find evidence that firms enhance reputations by the quality of their environmental disclosures and by virtue of the quality of audit committees. Higher disclosure volume alone does not lead to increased reputation. Audit committees that comply with Smith (2003) recommendations, complement higher quality, difficult to replicate disclosures, in promoting reputation.

Do Financial Analysts Care About Environmental Disclosures in Corporate Annual Reports?

The paper examines the role of environmental disclosures and their effect on the accuracy of financial analysts’ forecasts. Specifically it examines and compares the effects of the volume and quality of disclosure. In doing so, it distinguishes between ‘greenwash’ and more specific, quantified and comparable disclosures that have the potential to provide more effective market signals. The paper demonstrates that there is a significant negative relationship between the quality of disclosure and analyst forecast error. The mere volume of disclosure meanwhile only adds to forecast accuracy in the absence of quality, and to a lesser degree. Disclosure quality therefore is valuable for investment decision makers when evaluating the financial consequences of firm level environmental policies, and potentially in wider contexts.

Firm Characteristics, Governance Attributes and Corporate Voluntary Disclosure: A Study of Jordanian Listed Companies

This paper focuses on the voluntary disclosure in corporate annual reports in Jordan, and its objectives are: (1) To measure the voluntary disclosure level in the annual reports of Jordanian companies listed in Amman Stock Exchange (ASE). (2) To examine the relationship between a number of explanatory variables and the level of voluntary disclosure. Unweighted disclosure index consisting of 63 voluntary items was developed to assess the level of voluntary disclosure in the annual reports of 124 listed companies on ASE for the period of 2010 to 2012. Univariate and Multivariate analysis were applied to explore the relationship between each explanatory variables and the level of voluntary disclosure and a number of sensitivity tests were taken to further analysis. The findings of the study reveal that the level of voluntary disclosure in Jordanian corporate annual reports is low (its average is 35.7% for three years), although there is a significant increase in the level of voluntary disclosure from year to year. Univariate analysis reveals that firm size, leverage, firm age, profitability, liquidity, board size and audit committee size have a significant positive relationship with the level of voluntary disclosure while independent directors and ownership structure have a significant negative relationship with the level of voluntary disclosure. Meanwhile, multivariate analysis reveals same results to Univariate analysis except leverage has no impact on the level of voluntary disclosure.

Ownership Concentration and Corporate Disclosure in Bangladesh

This paper shows that non-compliance with the mandatory disclosure requirements is pervasive in Bangladesh. This is contrasted with the observation that audit opinion is often unqualified. Given that accounting standards and disclosure rules are weakly enforceable, corporate disclosure practice is de facto discretionary in the country. The present study thus investigates cross-sectional determinants of financial disclosure in corporate annual reports. The findings show that, controlling for factors such as age, size, profitability and financial leverage, disclosure effect of ownership concentration is negative. The findings validate the view of La Porta et al. (1999) that an increasing ownership concentration leads corporate management to adopt a disclosure regime which is biased against the external shareholders and creditors. The findings imply an information problem whereby insiders will likely expropriate outside shareholders in an environment where legal protection of the latter is weak.

Improving the relevance of risk factor disclosure in corporate annual reports

This research develops a model for assessing the quality of risk disclosures and applies the proposed model to four companies in the food production and processing sector. We contribute to the literature by extending prior work on risk disclosure quality using a longitudinal approach to assess the quality of risk reporting. While previous studies have described disclosure practices, this paper adopts a normative approach to disclosure. By suggesting a way of improving risk reporting disclosures, the paper provides guidance for current and future company managers. In line with previous research, this paper identifies certain problems with existing risk disclosures. Results suggest that company managers prefer providing disclosures that are symbolic rather than substantive. We argue that institutional factors and proprietary costs contribute towards and can explain this behaviour. In suggesting a way forward we highlight the role that stakeholders including managers, users, regulators and auditors can play in improving the quality of risk reporting. Flexibility in reporting could be maintained by adopting a properly monitored ‘comply or explain’ approach.

Corporate social responsibility and corporate governance in Malaysian government‐linked companies

PurposeThe purpose of this paper is to investigate whether there has been a change in the level of corporate social responsibility (CSR) disclosure and to determine whether corporate governance attributes influence CSR disclosure in corporate annual reports of Malaysian government‐linked companies (GLCs).Design/methodology/approachThe annual reports of 27 GLCs for two years (2005 and 2007) were analysed using content analysis. Multiple regression analysis was performed to identify factors influencing CSR disclosure in annual reports.FindingsConsistent with expectations, the paired‐sample t‐tests showed that there was an increase (significant at the 1 percent level) in the extent of CSR disclosure. The multiple regression analysis revealed that board size was positively associated and statistically significant (at the 1 percent level) with the extent of CSR disclosure.Research limitations/implicationsThe regression model reported an R2 of 33.9 percent, which means that almost 66 percent of factors influencing CSR disclosure in Malaysian GLCs have not been captured by the model. These other factors may perhaps be identified through other research methods such as questionnaire surveys or interviews.Practical implicationsThe findings appear to suggest that the government efforts in promoting CSR among GLCs through the introduction of the Silver Book in 2006 have had some positive impact on CSR disclosure in annual reports. The results also imply that larger board size through wider exchange of ideas and experience could lead to better appreciation and involvement in corporate social activities and hence disclosure in annual reports.Originality/valueThis paper is one of the few studies to examine CSR disclosure and corporate governance attributes in GLCs after the introduction of new initiatives to promote CSR.

Ownership structure and voluntary disclosure in corporate annual reports of Malaysian listed firms

This paper examines the impact of ownership structure on the voluntary disclosure in the annual reports of Malaysian listed firms. The result shows that there is an increase in the extent of voluntary disclosure in Malaysian listed firms over the eleven-year period from 1996 to 2006. Ownership concentration consistently shows positive association with voluntary disclosure. Firms with higher foreign and institutional ownership have a significantly positive association with voluntary disclosure levels while firms with family ownership exhibit lower voluntary disclosure. Consistent with agency theory, different ownership structures have varied monitoring effects on agency costs and clearly influence firm’s disclosure practices. The findings provide insights to policy makers and regulators in their desire to increase transparency and accountability amidst the continual enhancement of corporate governance. The findings provide evidence that optimized ownership structure in any jurisdiction should be considered in any regulatory process that seeks to improve transparency.

Informativeness of Risk Disclosures in Corporate Annual Reports

We examine the association between changes in companies’ textual risk disclosures in 10-K filings and changes in stock market and analyst activity around the filings. We find that annual increases in risk disclosures are associated with increased stock return volatility and trading volume around and after the filings. Increases in risk disclosures are also associated with more dispersed forecast revisions around the filings. In contrast to prior literature documenting resolved uncertainties in response to various types of company disclosures, our findings suggest that textual risk disclosures increase investors’ risk perceptions. However, the results are less pronounced for firm-level disclosures that deviate from those of other companies in the same industry and year. These results lend support for critics’ arguments that firm-level risk disclosures are more likely to be boilerplate.

A more subtle set of information in corporate annual reports for disadvantaged stakeholders

The traditional corporate annual report consists of two types of disclosures, that is, mandatory and contextual disclosures. The research problem focuses on the issue whether full disclosure in corporate annual reports could entail mandatory and contextual disclosures as well as a more subtle set of information for disadvantaged stakeholders. To solve the research problem, use was mainly made of a literature review dealing with certain aspects of decision-useful financial reporting. The literature review was complemented by exploratory empirical research. It was found that full disclosure in corporate annual reports could consist of mandatory and contextual disclosures as well as a more subtle set of information for disadvantaged stakeholders.