Higher Levels Of Disclosure Research Articles

Material Control Weakness Corrections: The Enduring Effects of Trust in Management

ABSTRACT We examine whether investors alter their assessments of investment risk in response to corrections of material control weaknesses and the nature of the original disclosure of the weaknesses. Rose et al. (2010) find that the effect of the pervasiveness of control weaknesses is moderated by the extent of disclosure such that more detailed disclosure mitigates (exacerbates) the negative effect of more (less) pervasive weaknesses. They also conclude that trust in management is an underlying cause of this effect because high levels of disclosure for non-pervasive weaknesses are viewed as attempts to disguise bad news, while high levels of disclosure for pervasive weaknesses are viewed as honest. Based upon the findings from an experiment, we find evidence to indicate that the form of control weakness disclosures creates enduring effects on investors, even after remediation of control weaknesses. Our results indicate that the effects of trust persist after control weaknesses are remediated.

Communicating CSR: integrated approach or Selfie? Evidence from the Milan Stock Exchange

Nowadays companies operate in a context in which communicating environmental and sustainability issues are gaining an increasing and strategic importance. Numerous studies reveal the continuous improvement of both the amount of Corporate Social Disclosure and the different channels used (e.g., Internet, sustainability reports, annual reports, and codes of ethics). In this study a legitimacy theory framework has been adopted to understand the extent to which listed companies incorporate sustainability information in a coherent and unique framework. Departing from previous literature, a content analysis on the corporate websites and main documents was performed to develop a Corporate Social Disclosure Index and an Integration Index aimed at identifying the correlation between the quality of disclosure and the integration among documents. From the analysis, it emerges that just a few leading companies that show a high level of Corporate Social Disclosure have an equally high level of content integration. The results show that, although listed companies employ different means to convey social responsibility issues, such instruments are not always aligned among themselves. Given the lack of coherence resulted among documents, this paper calls for the need to enhance the process of integrating reports, as it has an important value in strengthening the integration of sustainability in organizations' culture and identity. It also makes an appeal to managers proposing a matrix useful for evaluating companies' performances in terms of both disclosure practices and integration of produced documents, and driving their efforts towards the maximization of their results.

Board characteristics and corporate social responsibility disclosure in the Jordanian banks

This paper aims to examine the impact of board characteristics on the level of corporate social responsibility disclosure (CSRD) in the Jordanian banking sector for a sample of 147 banks/years during a period of 10 years (2004-2013). A checklist consisting of 100 items is developed to measure the disclosure level and the result indicates a relatively low level of disclosure in Jordanian banks. Multiple regression analysis is employed to examine the developed hypotheses. The results indicated that the larger board size and higher level of disclosure are correlated. However, low level of disclosure is associated to higher proportion of independent directors and institutional directors. In addition, female director is found to negatively affect the level of disclosure. This study has filled some of the previous studies’ gaps; the study is conducted in a new business environment. Besides, previous CSRD’s studies have not considered some of the board characteristics such as institutional directors. Thus this study investigates their impacts on the level of CSRD. In addition, this study provides some guidelines for the future works. Furthermore, the findings of this study might be interested to several groups of shareholders and stakeholders such as government, regulators, potential investors and CSR agencies.

MANAGEMENT EARNINGS FORECAST DISCLOSURE: A STUDY ON THE RELATIONSHIP BETWEEN EBITDA FORECAST AND FINANCIAL PERFORMANCE

The creation of overly optimistic information can compromise the decision-making process on part of shareholders and other stakeholders. Considering that this type of information can create problems and additional costs stemming from erroneous choices made by users, the present work sought to identify financial indicators associated with the disclosure of Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) estimates in Management Earnings Forecasts (Guidance) reporting. The sample examined was composed of 42 companies and analyses were carried out using logistic and multiple linear regression techniques. The results showed that larger (as per total assets) and more-leveraged companies show a higher level of disclosure. Companies with higher return on equity (ROE) and Current Liquidity ratios, as well as lower Net Margins, present less precise earnings forecast. The companies providing more timely forecasts are also the ones that show higher ROE and Current Liquidity ratios, as well as lower Net Margins. These results indicate that users must take caution when basing decisions on such information, given that the possibility exists that companies bearing these characteristics are more likely to better-timed albeit less-accurate disclosure.

Práticas de disclosure econômico e socioambiental nas maiores empresas do Brasil

The present study aims at investigating disclosure practices from a sustainability point of view in major Brazilian companies according to guidelines by GRI, Global Reporting Initiative. Additionally, disclosure is verified by taking into consideration the nature of company activities in relation to their potential for environmental impact, according to disposition by law number 10.165/2000. In order to do that, there was a qualitative research with an analysis of content of sustainability reports by 33 companies which published GRI reports in the 2009-2010 period. The results showed a high level of disclosure with a highlight on companies considered to have great potential for pollution. Besides that, it was perceived that the social indicators are the ones that provide companies with the most opportunities to talk over their practices towards collaborators and society while economic and environmental indicators proved more objective, being generally presented as illustrations. It is possible to identify the companies’ search for market legitimacy, since it is through the announcement of such information that these companies display their main measures towards the improvement of people’s lives as well as environmental preservation, which directly affect their image before stakeholders.

The Malaysian Disclosure Framework on Executive Directors’ Remuneration: A Critical Review and Closing Its Loops

Disclosure of executive directors’ remuneration especially on their individual pay continues to be a sensitive issue especially in a country like Malaysia where ownership is tightly held and potential rent extractions are significant. The objective of this paper is to provide a critical review on the existing Malaysian disclosure framework on executive directors’ remuneration. It outlines and assesses the current disclosure frameworks in ensuring high level of disclosure on executive directors’ remuneration, covering the Malaysian Corporate Governance Code, the Bursa Malaysia Listing Rule and the Malaysian Financial Reporting Standards. The review shows that there are weaknesses in the overall framework and offer suggestions on how to close the loops in order to improve the level of disclosure of executive directors’ remuneration. It is suggested that the Malaysian regulators adopt a mandatory and prescriptive approach in dealing with the disclosure of executive directors’ remuneration and to step up their enforcement to ensure full compliance to the disclosure framework. DOI: 10.5901/mjss.2015.v6n6p410

Corporate social responsibility, country-level predispositions, and the consequences of choosing a level of disclosure

We study the different levels of corporate social responsibility (CSR) disclosures of the largest European firms. We find that firms are more predisposed to disclose more CSR information in countries with better investor protection, higher levels of democracy, more effective government services, higher quality regulations, more press freedom, and a lower commitment to environmental policies. Our analysis of the association of different levels of CSR disclosure with share prices indicates that a high level of CSR disclosure is associated with higher share prices, whereas a low level of CSR disclosure in sensitive industries is associated with lower share prices (compared to no disclosure). These results are also present when we analyse changes in CSR disclosure and are robust to the inclusion of an accounting quality measure in our model. The overall effect of the association of higher levels of CSR disclosure with higher share prices is stronger in countries with more democracy, more government effectiveness, better regulatory quality, and more press freedom. Therefore, market participants find CSR disclosures more informative in countries where investors are in a better position to voice their concerns and where there is better regulation and more effective government implementation of regulations.

Theoretical foundation of IC disclosure strategies in high-tech industries

The purpose of this article is to examine the Intellectual Capital (IC) disclosure strategies of high-tech companies under different theoretical perspectives (agency, signalling and proprietary costs theories). According to the agency theory, the failure of traditional financial statements to report the ‘soft assets’ would lead knowledge-intensive firms (where the components of IC are structurally higher) to provide a higher level of disclosure in order to reduce the greater information asymmetries with external firm agents. However, because of the highly proprietary nature of IC information (proprietary costs theory) as well as the relevance of IC information to externally signal the key sources of superior quality of a company (signalling theory), different IC disclosure strategies may be adopted by managers of intellectual-capital-rich firms, depending on the particular motivations associated with firm-specific characteristics of these companies. Therefore, this study aims to better understand which theoretical framework under examination (if any) is best at interpreting the observed IC disclosure policies of high-tech companies. To this end, we deduce, and test, a set of hypotheses in accordance with the theoretical frameworks considered. The study also takes into account the effects of changes in the governmental regulation concerning non-financial information that occurred during the period examined. The empirical analysis is conducted on all Italian high-tech listed companies and based on longitudinal data (of 5 years: 2007–2011). By using longitudinal data and the population of all of the high-tech Italian companies, the analysis overcomes the well-known limitations of the sampling and the cross-sectional data that provide snapshot results. The findings reveal that the companies’ disclosure strategy primarily depends on the specific category of the IC information. In particular, the results suggest that the proprietary costs theory prevails in explaining the companies’ disclosure behaviour on internal IC information. The signalling theory prevails in the explanation of the communication strategies about external IC most likely to enhance investors’ confidence in the intangible key value drivers relating to relational capital. Finally, for companies examined, higher levels of ownership diffusion represent the primary incentive to disclose human capital information to reduce agency/monitoring costs (in presence of higher leverage) or signal to the market the superior quality (in presence of higher profitability). This article extends the existing empirical literature on IC disclosure behaviour in high-tech industries by analysing the disclosure strategies of high-tech companies under different theoretical perspectives including proprietary cost theory. In addition, the comprehensive regression model (with specific two-way interaction terms) used in this study expands on the extant approaches for the analysis of IC disclosure determinants allowing to capture some aspects that could be omitted when only the explanation variables taken separately are considered. This study has practical implications for various parties, such as regulators. It provides empirical evidence for the primary limits (relating to the proprietary costs) to an introduction of mandatory law requirements regarding the information on internal structure of IC. In particular, our findings prove that companies exposed to the threat of competitive disadvantages prefer not to provide – by formal channels, such as annual reports – additional internal IC information.

The Impact of Financial Disclosure on Attendee Assessment of Objectivity in Continuing Medical Education Programs in Psychiatry: A Randomized, Controlled Trial.

The purpose of financial conflict of interest disclosures by speakers at continuing medical education (CME) programs is to assist attendees in their assessment of the objectivity of the information presented. This empirical study was undertaken to determine what level of disclosure is optimal to achieve this goal. Attendees at five CME programs were randomly assigned to receive either a standard financial disclosure, an intermediate level that included whether speakers received more or less than 5% of their income from each company they disclosed, or a high level of disclosure that included the percent of their income derived from each company. A total of 169 attendees (85.4% response rate) completed a questionnaire regarding the objectivity of the CME presentation they attended. Attendees receiving the highest level of disclosure came significantly closer to the ratings of speaker bias made by peer reviewers than did attendees receiving medium or low levels of disclosure (p = 0.03; effect size 0.31). Among the minority of attendees who received the highest level of disclosure but whose assessment of bias differed from that of peer reviewers, however, there was a tendency to underestimate bias (5.9 vs 31.4%; p < 0.0001). The major limitation of this study was an overall low level of bias in the presentations, making it difficult to generalize these findings to less objective programs. The study did not address whether the process of disclosure had an impact on speakers' behavior. This study provides mixed support for higher levels of financial disclosure than are currently required for CME programs.

Evidenciação e volatilidade: testes com equações estruturais

The aim of this paper was to analyze the relationship between the disclosure level of accounting reports of the Brazilian non-financial companies listed on the NYSE (New York Stock Exchange) and the volatility in the return of their assets. The proposed analysis was performed through the use of Structural Equation Modeling; in the development of the tests, we considered the potential differences in informational efficiency of capital markets in Brazil and in the U.S. (Fama, 1970, 1991). We observed that the size of the companies showed a positive and significant relationship with the disclosure level, indicating that even if the companies of the sample have the best levels of disclosure, because they emit ADRs levels II or III at NYSE, and thus tend to be in a group of large companies, size was positively and significantly related to disclosure. For a 5% level of significance, we also confirmed the hypothesis that firms with higher levels of disclosure had lower volatility in returns on their securities. Thus, companies with more detailed information about financial instruments in their financial reports showed less volatility in the returns of their shares. Keywords: disclosure, volatility, financial instruments.

Binge Drinking among Men Who Have Sex with Men and Transgender Women in San Salvador: Correlates and Sexual Health Implications.

High rates of heavy alcohol use among men who have sex with men (MSM) and transgender women (TW) have been linked to increased vulnerability for HIV and poor mental health. While theories explaining elevated drinking levels among sexual minorities have been forwarded, few investigations have assessed the potential pathways using empirical data, particularly with an explicit focus on self-stigma and among MSM and TW in low- and middle-income countries. This study examined the relationship between stigma-related stress (specifically, self-stigma and concealment of one's sexual orientation) and binge drinking in a sample of MSM and TW (n = 670) in San Salvador, El Salvador, recruited using respondent-driven sampling. Levels of alcohol consumption among participants were high: only 39 % of the sample did not drink alcohol or did not binge drink, while 34 % engaged in binge drinking at least weekly. Among MSM, high self-stigma was associated with binge drinking at least weekly (adjusted relative risk ratio (aRRR) = 2.1, p < 0.05). No such relationship was found with less than weekly binge drinking. Among both MSM and TW, having a female partner was associated with binge drinking less than weekly (aRRR = 3.3, p < 0.05) and binge drinking at least weekly (aRRR = 3.4, p < 0.05), while disclosure of sexual orientation to multiple types of people was associated with binge drinking less than weekly (aRRR = 2.9 for disclosure to one-two types of people, p < 0.01; aRRR = 4.0 for disclosure to three-nine types of people, p < 0.01). No such relationship was found with at least weekly binge drinking. Binge drinking at least weekly was marginally associated with a number of sexual health outcomes, including high number of lifetime partners (adjusted odds ratio (aOR) = 1.7, p < 0.10), inconsistent condom use with a non-regular partner (aOR = 0.5, p < 0.10), and decreased intention to test for HIV in the next 12 months (aOR = 0.6, p < 0.10). With the exception of inconsistent condom use with a non-regular partner (aOR = 0.4, p < 0.05), binge drinking less than weekly was not associated with increased sexual risk behavior and was actually associated with increased intention to test for HIV in the next 12 months (aOR = 2.8, p < 0.01). These findings support multiple pathways linking stigma-related stress to alcohol use. Specifically, those with high self-stigma and identity concealment may be using alcohol as a maladaptive coping and emotion regulation strategy, while those who have disclosed their sexual orientation to multiple types of people may be more engaged with the sexual minority community, likely in bars and other venues where permissive norms for alcohol use prevail. That this frequency of binge drinking does not appear to be associated with increased sexual risk behavior (and may even be associated with increased intention to test for HIV in the next 12 months) lends further support to the suggestion that these individuals with healthy concepts of the self (as indicated by high levels of disclosure and low levels of risky sexual behavior) may engage in binge drinking because of the influence of the social environment. Further research is needed to establish the pathways linking stigma-related stress to heavy alcohol use so that points of intervention can be identified.

Voluntary disclosure, information asymmetry and the perception of governance quality: An analysis using a structural equation model

This study analyzes the direct and indirect relation between the governance rules and information asymmetry, through the voluntary disclosure and organizational performance, using Iberian Peninsula listed companies. The results show that for firms with high levels of disclosure the bid–ask spread is lower. However, in firms with a high ownership concentration investors tend to increase the bid–ask spreads and trade less. The results show us how the governance rules exert influence on the proxies of information asymmetry in the market. The failure to find the relationship between voluntary disclosure of information and the turnover ratio shows us that the liquidity of shares is more related to the greater or lesser concentration of shareholders, with the performance of their companies than with the access to information. Moreover, it is clear that the role that information disclosure plays in these markets is mainly at the level of price formation.

Determinants of Share Price and Share Liquidity: An Analysis Using a SEM Model

Abstract We examined the impact of governance rules on share price and liquidity, using the turnover ratio and the bid-ask spread as proxies for the information asymmetry. We used a SEM model and analyzed the indirect relations through the voluntary disclosure of information and the organizational performance. We built a voluntary disclosure index based on the information firms provided in their annual reports and divided the governance characteristics in two constructs: directors’ and supervisors’ structures and ownership structure. We concluded that the ownership structure exerts a direct influence on share price and share liquidity, Otherwise, the directors’ and supervisors’ structures exert an indirect influence, through the organizational performance and the voluntary disclosure of information. The results also show that for firms with high levels of disclosure the bid-ask spread is lower. However, in firms with a high ownership concentration investors tend to increase the bid-ask spreads and trade less, which, in this case, reduces the liquidity of the stock. The failure to find the relationship between voluntary disclosure of information and the turnover ratio shows us that the liquidity of shares is more related to the greater or lesser concentration of shareholders, with the performance of their companies than with the access to information. Moreover, it is clear that the role that information disclosure plays is mainly at the level of price formation.

Political pressures and the evolution of disclosure regulation

This paper examines the process that drives the formation and evolution of disclosure regulations. In equilibrium, changes in the regulation depend on the status quo, standard-setters’ political accountability and underlying objectives, and the cost and benefits of disclosure to reporting entities. Excessive political accountability need not implement the regulation preferred by diversified investors. Political pressures slow standard-setting and, if the standard-setter prefers high levels of disclosure, induce regulatory cycles characterized by long phases of increasing disclosure requirements followed by a sudden deregulation.

Men of steel: Voluntary accounting information disclosure in the first third of the twentieth century at U.S. Steel Corporation

Before the emergence of accounting regulation and broadly-based equity ownership in the US, corporations had a relatively free hand over financial information disclosure. Why information was disseminated was therefore a purer window into corporate strategy. This paper considers the case of U.S. Steel Corporation, a dominant industrial company for the good part of the 20th century in the world's largest economy. Two explanations, stewardship and legitimacy theory are offered as rationales for the company's relatively high level of voluntary disclosure. The results suggest that the stewardship model is the one most likely to explain the variation in the historical pattern of disclosure.

Let’s talk strategy: the impact of voluntary strategy disclosure on the cost of equity capital

AbstractThis paper deals with the impact of voluntary strategy disclosure in management reports on the cost of equity capital. Such an impact is not obvious, as investors might consider strategy information as “cheap talk” and therefore ignore it. We analyze a sample of 100 German listed firms from 2002 to 2008, measuring strategy disclosure levels using hand-collected strategy disclosure scores. We find that higher disclosure levels are, on average, associated with lower cost of equity capital even after controlling for overall disclosure quality. The paper contributes to the field by providing evidence that voluntary strategy disclosures in firms’ management reports reduce the information asymmetry component of cost of capital and therefore can be considered as a relevant source of information for investors.

Experiences of HIV-related stigma among HIV-positive older persons in Uganda – a mixed methods analysis

There is limited data on stigma among older HIV-infected adults in sub-Saharan Africa. We describe the experiences of stigma and disclosure in a cohort of HIV-positive older people in Uganda. Using data from the Wellbeing of Older Peoples' Study of Kalungu (rural site) and Wakiso district (peri-urban site) residents, we measured self-reported stigma levels for 183 respondents (94 on antiretroviral therapy (ART); 88, not on ART) using a stigma score generated using three questions on stigma perceptions where 0 meant no stigma at all and 100 was maximum stigma. Based on two questions on disclosure, an overall score was computed. High disclosure was assigned to those who often or very often disclosed to the family and were never or seldom afraid to disclose elsewhere. We examined the experiences of HIV stigma of 25 adults (52% females) using semi-structured, open-ended interviews and monthly oral diaries over one year. Mean age of the respondents was 70 years (range 60–80 years) and 80% of all respondents were enrolled in ART. Interview transcripts were analysed using thematic content analysis. Overall, 55% of respondents had a high disclosure score, meaning they disclosed easily, and 47% had a high stigma score. The stigma scores were similar among those with high and low disclosure scores. In multivariate analyses with disclosure and stigma scores as dependent variables none of the respondents' characteristics had a significant effect at the 5% level. Qualitative data revealed that stigma ranges from: (1) perceptions (relatively passive, but leading to behaviour such as gossip, especially if not intended maliciously); to (2) discriminatory behaviour (active or enacted stigma; from malicious gossip to outright discrimination). Despite the relatively high levels of disclosure, older people suffer from high levels of stigma of various forms apart from HIV-related stigma. Efforts to assess for different forms of stigma at an individual level deserve greater attention from service providers and researchers, and must be context specific.

Corporate Social Responsibility: Country-Level Predispositions and the Consequences of Choosing a Level of Disclosure

We study the different levels of corporate social responsibility (CSR) disclosures of the largest European firms. We find that firms are more predisposed to disclose more CSR information in countries with: better investor protection, higher levels of democracy, more effective government services, higher quality regulations, more press freedom, and a lower commitment to environmental policies. Our analysis of the association of different levels of CSR disclosure with share prices indicates that a high level of CSR disclosure is associated with higher share prices, whereas a low level of CSR disclosure in sensitive industries is associated with lower share prices (compared to no disclosure). These results are also present when we analyse changes in CSR disclosure, and are robust to the inclusion of an accounting quality measure in our model. The overall effect of the association of higher levels of CSR disclosure with higher share prices is stronger in countries with more democracy, more government effectiveness, better regulatory quality, and more press freedom. Therefore, market participants find CSR disclosures more informative in countries where investors are in a better position to voice their concerns and where there is better regulation and more effective government implementation of regulations.

10.5937/sjm9-5784 = The use of voluntary disclosure in determining the quality of financial statements: Evidence from the Nigeria listed companies

The purpose of this study was to establish the use of voluntary disclosure in determining the quality of financial statements among the listed companies in Nigeria. Specifically the study investigated on the effects of voluntary disclosure on investor decision and performance of listed companies in Nigeria. This study adopted an exploratory design which is described as a method of collecting information by interviewing or administering a questionnaire to a sample of individuals. The instrument of data collection for this research was a questionnaire as the study used primary data. The study targeted all the 258 listed companies in Nigeria. The study population used in this research comprised of preparers (accountants), external auditors and users of accounting information (financial analysts, stockbrokers, bankers, regulators and educators). The sample of this study was 140 whereby twenty questionnaires were distributed in every category of the respondents. Descriptive statistics such as mode, median, mean, standard deviation, etc were used to perform data analysis. These measures were calculated using Statistical Package for the Social Sciences (SPSS 20) software. SPSS tool (Statistical Package for the Social Sciences) was used to organize and analyze data. The study findings indicated that there was increased performance and investor decision making was easy to make due to voluntary disclosure. The results indicate that voluntary disclosure was satisfactory in explaining investor decision making and performance of listed companies. It was possible to conclude from the study findings that voluntary disclosure was statistically significant in explaining investor's decision and performance of listed companies in Nigeria. It was also possible to conclude that there was high level of voluntary disclosure in Nigeria listed firms which led to high performance of the firms and made it easy for investors to make decision whether to invest in the companies or not.

Fatores explicativos da aderência das firmas brasileiras ao disclosure relativo às informações por segmento

The research aimed to raise the degree of compliance with the guidelines of disclosure as defined in CPC 22 by companies listed on the BM&FBovespa and to investigate characteristics of firms that could explain the adhesion to the disclosure, in addition to the standard itself. The final sample of research gathered 363 Brazilian public companies listed on the BM&FBovespa. It was found that, in general, companies had low compliance with the guidelines of the normative disclosure. From tests of differences between means, it was found that: part of the Textile Sector or, Vehicles & Parts Sector, Internationalization, being a company with stocks listed internationally, be audited by a Big Four audit firm or be listed in segments of Governance Corporate were associated with the companies of higher levels of disclosure. Furthermore, based on regression analysis, we cannot reject the hypothesis that adhesion of Brazilian firms to disclosure required by CPC 22 can be explained by the characteristics of firms that explain, since the characteristics Firm Size, be audited by a Big Four audit firm and be listed