Financial Disclosure Research Articles

THE OBLIGATION TO DISCLOSE THE SPOUSE’S SEPARATE PROPERTY IN A MAYOR’S FINANCIAL DISCLOSURE STATEMENT – CRITICAL COMMENTS ON THE DRAFT ACT

The transparency of the assets of persons performing key public functions is desired and expected by the public. However, the current regulations unfortunately do not guarantee it fully. Therefore, on 21 November 2023, a Draft Act Amending the Act on Restrictions on the Conduct of Business by Persons Performing Public Functions and Certain Other Acts was submitted by a group of Sejm members to the Speaker. This bill, commonly referred to as ‘clean hands’, provides for the principle under which the separate property of the spouses of state and local self-government officials will also have to be disclosed in the financial disclosure statements they submit. In the present study, the author analyses the proposed changes and assesses them through the prism of the principles and rights expressed in the Constitution. She also suggests adopting solutions that would effectively prevent the concealment of assets by persons obliged to submit financial disclosure statements.

Effectiveness of Anti-Corruption Laws in Developing Countries

Purpose: The aim of the study was to analyze effectiveness of anti-corruption laws in developing countries Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The effectiveness of anti-corruption laws in the USA has been a subject of extensive study and debate. Research indicates that while financial disclosure laws have a positive impact on controlling corruption, other measures such as state ethics commissions have not shown a significant effect on reducing corruption levels. Unique Contribution to Theory, Practice and Policy: Institutional theory, principal-agent theory & dependency theory may be used to anchor future studies on effectiveness of anti-corruption laws in developing countries. Governments and anti-corruption agencies should prioritize strengthening institutional capacity to effectively implement and enforce anti-corruption laws. Policymakers should prioritize enacting comprehensive legal reforms to strengthen anti-corruption frameworks, close loopholes, and enhance enforcement mechanisms.

A metric for tradable biodiversity credits quantifying impacts on global extinction risk

AbstractThe difficulty in identifying appropriate metrics for the impacts organizations have on biodiversity remains a major barrier to the inclusion of biodiversity considerations in environmentally responsible investment. We derive and analyze a simple metric: the sum of the proportional changes in the global abundances of species caused by an organization, with a regularization to cover the case of species close to extinction. We argue mathematically that this metric quantifies changes in the mean long‐term global survival probability of species. The metric thus supports the objective “to significantly reduce extinction risk” of the 2022 Global Biodiversity Framework and allows organizations to set themselves corresponding science‐based targets. We show that in a perfect market trade in biodiversity credits quantified by our metric would lead to near‐optimal allocation of resources to species conservation. We further show that metric values are quantitatively convertible to several other metrics and indices already in use. Barriers to adoption are therefore low. Used in conjunction with metrics addressing ecosystem services and integrity, potential areas of application include biodiversity related financial disclosures and voluntary or legislated biodiversity credit or no net loss policies.

Research on the Quality Evaluation and Improvement of Carbon Emission Right Accounting Information Disclosure in the Context of Low-Carbon Economy

This paper explores the accounting treatment of carbon emission rights in the petrochemical industry in China, focusing on the challenges and opportunities presented by carbon trading mechanisms. The study analyzes existing norms in the EU's carbon trading market and evaluates SINOPEC's approach to carbon accounting and emission reduction. Through a comprehensive review of financial reports, sustainability disclosures, and industry trends, the paper offers insights into improving the accounting treatment of carbon emission rights and promoting low-carbon transformation in the petrochemical sector.

How Do Online Conflict Disclosures Support Enforcement? Evidence from Personal Financial Disclosures and Public Corruption

ABSTRACT Public corruption is a concern for democracies around the world. In the U.S., states have responded to this issue by publishing personal financial disclosures (PFDs) for public officials online. PFDs are a conflict-of-interest disclosure designed to relieve agency conflicts between private citizens and government officials by documenting overlaps between officials’ financial interests and public responsibilities. This paper explores whether and how online PFD supports anticorruption enforcement. I present a stylized model illustrating how online PFD leads investigators to increase case referral volume and quality. Empirically, I find that online PFD for local officials is associated with increased referral rates and greater likelihoods of prosecution conditional on referral. I conduct 126 field interviews of federal prosecutors, journalists, and ethics commissions to understand the mechanisms behind these results. I conclude that online PFD supports the enforcement of local corruption by reducing disclosure acquisition costs for enforcement agents.

California Hospice Ownership Changes From 2018-2020: A Spatial Analysis and Case Illustration.

Hospices in California have undergone significant and complicated ownership changes in recent years. Little is known about the impact of these ownership changes on hospices. The purpose of our longitudinal, retrospective descriptive study was to describe the ownership changes impacting hospices 2018 to 2021 in California. Using descriptive statistics, we measured characteristics of hospices with and without ownership changes employing public data from the California Home Health Agencies and Hospice Annual Utilization Report. Ownership change characteristics were measured via publicly available hospice provider and facility data. Spatial characteristics were additionally measured via latitude and longitude publicly available data. Our findings showed that ownership changes were significant and complicated. An influx of for-profit organizations into the California market was primarily responsible for these changes. Additionally, lack of corporate financial public disclosure and voluntary hospice accreditation, certification, and reporting result in a lack of free, publicly available, definitive comprehensive data on for-profit hospice ownership. This hinders information gathering on and provider/familial choice-making regarding hospices. Our study provides critical insight into the impact of ownership changes and lack of definitive, free, publicly available information on adult hospices in California caring for children and has important clinical, research, and policy implications.

The role of firm complexity in the relationship between integrated reporting and earnings management

PurposeThis study aims to evaluate the relationship between integrated reporting and management’s opportunistic behavior (i.e., accrual and real earnings management) and the moderating role of firm complexity.Design/methodology/approachData of firms at the Johannesburg Stock Exchange were collected and analyzed. The Johannesburg Stock Exchange is currently the primary exchange that mandates the practice of integrated reporting. Regression estimation models and robustness tests were applied to the analysis.FindingsThis study concludes that integrated reporting quality reduces firms’ accrual and real earnings management practices. It further concludes that the significant negative effect of integrated reporting quality on firms’ earnings management practices is impeded by higher firm complexity.Originality/valueThis study enhances the literature on the behavioral effect of a combined financial and sustainability disclosure practice on both accrual and real earnings management, specifically targeting South Africa’s listed companies – the primary market currently mandates integrated reporting practice.

The value of information risk: is there an acquisition discount for less readable financial disclosures?

ABSTRACT The readability of financial disclosures plays a crucial role in how firms effectively communicate value-relevant information to the market. This study investigates the association between readability and firm valuation within the context of takeovers. We find that target firms with less readable annual reports receive lower bids and earn lower announcement returns. Our findings suggest that both acquirers and the market discount opaque targets, especially in inter-industry acquisitions, where adverse selection is more severe compared to intra-industry deals.

How Firm Characteristics Affect the Timeliness of Financial Disclosures in Nigerian Insurance Firms

Increasing the relevance of corporate financial statements to decision-making processes necessitates rapid availability of financial information to users. This study delves into the timely reporting practices of Nigerian insurance companies over a twelve-year period, spanning from 2009 to 2021. Through an examination of firm characteristics such as size and age, alongside the timeliness of financial reports measured by audit report delay, this research sheds light on the intricate dynamics influencing financial reporting practices within the Nigerian insurance sector. Utilizing advanced statistical analysis techniques including fixed effect modeling and diagnostic tests for data normality and heteroskedasticity, the findings unearth compelling insights. Notably, while firm size exhibits a significant negative impact on financial reporting timeliness, the influence of firm age proves to be less straightforward, indicating nuanced factors at play. This study underscores the imperative for insurance companies to bolster their asset bases, thereby enhancing their capacity to mitigate delays in financial reporting. By elucidating the interplay between firm characteristics and reporting timeliness, this research offers actionable recommendations to fortify the integrity and efficiency of financial reporting practices within the Nigerian insurance industry.

SAP Integration Boosts Financial Transparency in Indonesia

This study evaluates the implementation of the SAP system at PT. Kimia Farma Pharmacy Sidoarjo Business Unit and its impact on financial report transparency. Using a descriptive qualitative method involving interviews, observation, and documentation, the research found that only four of nine SAP modules are used, yet the system is well-implemented. The SAP system enhances financial report transparency by meeting key transparency characteristics, thereby reducing fraud and ensuring accurate financial disclosures. This suggests that even partial SAP implementation can significantly improve financial transparency. Highlight: Limited Modules: Four of nine SAP modules are effectively utilized. Transparency Boost: SAP system enhances financial report transparency significantly. Fraud Reduction: Improved transparency reduces fraud and ensures accurate financial disclosures. Keyword: SAP system, financial transparency, qualitative analysis, Kimia Farma, financial reporting

Innovation Strategy After IPO: How AI Analytics Spurs Innovation After IPO

We examine the role of AI analytics in facilitating innovation in firms that have gone through IPO. Using patent data on over 1,000 publicly traded firms, we find that firms acquiring AI analytics capability post-IPO experience less of a decline in innovation quality compared with similar firms that have not acquired that capability. This effect is greater when only machine learning capabilities are considered. Moreover, we find this sustained rate of innovation is driven principally by the continued development of innovations that combine existing technologies into new ones—a form of innovation that is especially well supported by analytics. By examining three main mechanisms that hampered post-IPO innovation, we find that AI analytics can ameliorate the pressure to meet short-term financial goals and disclosure requirements. However, it has limited effect in addressing managerial incentives. For firms with long product cycles, the disclosure effect is reduced to a greater extent than it is for those with short cycles. Overall, our results show the importance of examining technology as a critical input factor in innovation. We show that the increased deployment of AI analytics may reduce some of the innovative penalties suffered by IPOs and that investors and managers can potentially mitigate post-IPO reductions in innovative output by directing capital acquired in the IPO process to the acquisition of AI analytics capabilities. This paper was accepted by D. J. Wu, information systems. Funding: The authors appreciate the generous financial support from Wharton Dean’s Research Fund and Mack Institute for Innovation Management. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.01559 .

Media Background of Directors and Financial Risk Disclosure: Evidence from Indonesia

Media Background of Directors and Financial Risk Disclosure: Evidence from Indonesia

Varying Levels of Financial and Non-Financial Information Disclosure in the European Union - FSE and BSE Analysis

Varying Levels of Financial and Non-Financial Information Disclosure in the European Union - FSE and BSE Analysis

Is greater connectivity of financial and non-financial information in annual reports valued by market participants?

The establishment of the International Sustainability Standards Board (ISSB), and the endorsement by the International Financial Reporting Standards (IFRS) foundation of the principles underlying the Integrated Reporting (IR) Framework, attest to a regulatory intent to develop a disclosure framework better connecting sustainability-related financial disclosures with financial disclosures. Strategic Reporting (SR), effective in the United Kingdom (U.K.) since 2013, is a prime example of such a framework. Utilizing proprietary data from PwC U.K., we find higher SR disclosure quality is associated with higher liquidity, lower cost of capital, and more accurate, less dispersed analysts’ forecasts. We then hypothesize and compare these impacts with the capital market effects of disclosure quality under the reporting framework preceding SR. We find that the effects of higher liquidity and lower cost of capital are more pronounced under SR, suggesting that SR, as a mandated, more connected reporting framework, enables more effective capital market communication. We also find that the incremental capital market benefits are more significant for entities with higher exposure to the change, better sustainability performance and higher organizational complexity. For regulators and standard setters, these findings indicate that their emphasis on greater connectivity of financial and non-financial information is valued by market participants.

Quality, Reliability, Readability, and Accountability of Online Information on Leukocoria.

To evaluate the quality, reliability, and readability of online patient educational materials on leukocoria. In this cross-sectional study, the Google search engine was searched for the terms "leukocoria" and "white pupil." The first 50 search outcomes were evaluated for each search term based on predefined inclusion criteria, excluding duplicates, peer-reviewed papers, forum posts, paywalled content, and multimedia links. Sources were categorized as "institutional" or "private." Three independent raters assessed each website for quality and reliability using DISCERN, Health on the Net Code of Conduct (HONcode), and JAMA criteria. Readability was evaluated using seven formulas: Flesch Reading Ease (FRE), Flesch-Kincaid Grade Level (FKGL), Simple Measure of Gobbledygook (SMOG) Index, Automated Readability Index (ARI), Linsear Write (LW), Gunning Fog Index (GFI), and Coleman-Liau Index (CLI). A total of 51 websites were included. Quality, assessed by the DISCERN tool, showed a median score of 4, denoting moderate to high quality, with no significant differences between institutional and private sites or search terms. HONcode scores indicated variable reliability and trustworthiness (median: 10, range: 3 to 16), with institutional sites excelling in financial disclosure and ad differentiation. Additionally, institutional and private sites performed well in reliability and accountability, as measured by the JAMA Benchmark criteria (median: 3; range: 1 to 4). Readability, averaging an 11.3 ± 3.7 grade level, did not differ significantly between site types or search terms, consistently falling short of the recommended sixth-grade level for patient educational materials. The patient educational materials on leukocoria demonstrated moderate to high quality, commendable reliability, and accountability. However, the readability scores were above the recommended level for the layperson. [J Pediatr Ophthalmol Strabismus. 20XX;X(X):XX-XX.].

Corporate Governance and Board Attributes: A Bibliometric View

Numerous high-profile corporate scandals in the 1990s—involving companies like Tyco, Enron, Arthur Anderson, Xerox, AIG Insurance, Lehman Brothers, etc.—elucidated the government's inadequacy in overseeing shareholder interests. These scandals affected markets worldwide. In order to address corporate misconduct and keep investor trust and strong performance, it is claimed that CG must be improved to a "sound" quality. Some well-known examples include the US Sarbanes-Oxley Act, the recommendations for corporations made by the EU Cadbury Committee, and the corporate governance standards set out by the OECD. First and foremost, the Cadbury Committee (1992) supported exposure as "a medium for responsibility," highlighting the need to increase reporting requirements to prevent regulatory complications. " But instead of trying to pin it down, they summed it up as "the ability for investors and others to assess companies' performance and governance practice and respond in an informed way"—commercial gest. "Guidance on Good Practices in Corporate Governance Disclosure" (OGCD, 2006) specifies that any major issues with the company's CG should be disclosed promptly. The "substance over form" principle dictates that the exposure be brief, precise, and easy to understand. As a result of these "new" developments, businesses are being pressured to follow "sharpe practice" requirements, claims Dragmore (2009). Reporting on corporate governance and social responsibility, community across time, adding an operations report, balancing financial and non-financial information, and story reporting are all part of these rules. The quality of financial and non-financial information disclosures is influenced by "the robustness" of the reporting morals, which FASB (2001) states is the basis for disclosures of both types of information. In addition, transparency reveals the company's performance, growth strategies, client demand, and issues (Chahine and Filatotchev, 2008). Shareholders are able to evaluate the operation's effectiveness as a result of information disclosure by observing how efficiently the company's funds are being utilised to benefit the star. It is possible to examine "exposure from two perspectives: marketable exposure and financial account exposure," as Solomon (2004) brought out. Information and its disclosure are the areas where account requirements and company law intersect, according to Parker (2007). One universal element of account regulations is the importance of providing stoners with sufficient and timely information so that they can engage in the request informed.

Case Study of Enterprise Value Assessment

Along with the gradual advancement of the deepening reform of our country's socialist market economy and the further optimization of resource allocation, the restructuring, investment, acquisition and merger of enterprises are becoming increasingly frequent economic activities. The evaluation of the value of the target enterprise is one of the important links. This paper takes the small household appliance industry as the starting point, takes the small B Electric Appliance Co., Ltd. as an example, and uses the discounted free cash flow model in the income method to estimate its market value. It can reflect that this method is conducive to providing detailed and solid basis for value assessment relatively comprehensively from the aspects of enterprise profitability, profit quality, future profit sustainability, expected rate of return of the industry in which it is located, and time cost of funds, etc., and is widely used in the capital financial market and market information disclosure requirements.

How corporate climate change mitigation actions affect the cost of capital

AbstractJapan has been at the forefront of global efforts to accelerate climate change mitigation. Japanese firms have led in the development of decarbonization technologies and have positively disclosed climate change‐related information based on the Task Force on Climate‐related Financial Disclosures recommendations to address climate change. We explore the relationship between corporate climate change mitigation actions and the cost of capital for 2100 Japanese listed companies from 2017 to 2021. The results reveal that a higher carbon intensity correlates with an increased cost of equity, debt, and weighted average cost of capital. Interestingly, although climate‐related information disclosure is associated with an increased cost of debt, it concurrently lowers the cost of equity and overall capital. This research recommends strategic approaches for firms to reduce their costs of capital while proactively combating climate change, highlighting the divergent responses of equity and bond markets to decarbonization initiatives.

Liquidity, Leverage, and Company Size on Earnings Quality with Profitability as a Moderating Variable

Research Aims: The aim of this research is to test and analyze the influence of liquidity, leverage and company size on earnings quality using profitability as a moderating variable. Design/methodology/approach: The population in this study are transportation companies listed on the Indonesia Stock Exchange for the 2020-2022 period. The sampling technique using purposive sampling technique resulted in 51 company observations. The analysis techniques used are Descriptive Statistical Analysis and Moderated Regression Analysis (MRA) as moderated regression analysis. The data analysis technique uses IBM SPSS Statistics 25 software.). Research Findings: The results of hypothesis testing show that liquidity and leverage have an effect on earnings quality, while company size has no effect on earnings quality. Profitability moderates the influence of leverage and company size on earnings quality, but is unable to moderate the positive influence of liquidity on earnings quality. Theoretical Contribution/Originality: The findings of this study may also have implications for further research and policy-making related to financial disclosure and corporate regulation. Keywords: Liquidity, leverage , company size, profitability, earnings quality

Do Gender-Diverse Boards Enhance the Linguistic Features of Corporate Financial Reporting?

SYNOPSIS Textual features, such as readability and disclosure tone, of mandatory financial reports have significant economic consequences. Managers and directors’ demographic attributes can also lead to different reporting styles. This study examines how gender-diverse boards influence the readability and tone of corporate financial disclosures under the framework of upper echelons theory. Using a sample of 3,085 U.S. firm-year observations from 2007 to 2016, we find that gender diversity in the board and audit committee enhances the readability of narrative disclosures and is associated with a less optimistic, litigious, and ambiguous tone in annual reports. This study highlights the contribution of female directors to the quality and transparency of financial disclosures and supports recent regulatory initiatives aimed at enhancing female representation on corporate boards.