Investment Disclosure Research Articles

Transaction-level transparency and portfolio mimicking

This study examines whether an increase in the transparency of investment transactions facilitates portfolio mimicking. While there are reported benefits of transparency in enhancing regulatory monitoring and discipline, an increase in the transparency of investment transactions can also facilitate mimicking of peer firms’ investment strategies. I exploit an exogenous increase in the broad dissemination of transaction-level investment disclosures of U.S.-based insurers and find a significant increase in portfolio similarity at the individual security level. Increases in portfolio similarity are more pronounced in smaller, less sophisticated insurers mimicking their larger, more sophisticated peers. Shared asset positions and common exposures to risk can exacerbate collective risk across firms. Accordingly, I find that the detectable increases in portfolio similarity are positively associated with measures of systemic risk, especially in those smaller insurers mimicking their peers. This study adds to a nascent literature on portfolio mimicking and highlights a potential negative externality of increased transparency.

The driving forces behind the prices of major cryptocurrencies: Evidence from the past five years

Purpose: The primary objective of this study is to uncover the complex relationship between cryptocurrency prices and significant global events that transpired within the past five years. These events encompass a wide spectrum, including political and global health crises, the public disclosure of multinational enterprises' investments in cryptocurrencies, and the influence of macroeconomic indicators. Beyond the exclusive focus on Bitcoin, this study adopts a more comprehensive approach encompassing various cryptocurrencies.Design/methodology/approach: This study examines the effects of the disclosure of cryptocurrency adoption plans by major corporations, the Russian-Ukraine war, Covid-19, Inflation rate, and Economic policy uncertainty within the U.S., U.K., and E.U on cryptocurrency prices (Bitcoin, Ethereum, and Binance coin) using a structural equation model over the past five years.Findings: Our findings provided several compelling insights. Most notably, during the study period major corporations’ adoption of cryptocurrencies positively influenced their price. Furthermore, a negative and significant association emerges between cryptocurrency prices and periods marked by economic policy uncertainty and inflation rates in the countries under investigation (U.S., U.K., and E.U). The results are robust under variations in sample composition and changes in sets of variables.Originality/value: The study uncovered the complex relationship between cryptocurrency price fluctuations and significant global events that transpired within the past five years by taking the factors identified in previous literature as a whole and adding new variables that are not well studied, such as the effect of Russian-Ukraine War and multinational corporations revealing cryptocurrency adoption intention on the prices of cryptocurrencies. This study represents a pivotal contribution by bridging a crucial research void and providing theoretical insights into the legal considerations to be undertaken by policymakers, and informed investment practices by traders, and corporate leaders.

LEGAL IMPLICATIONS OF BLOCKCHAIN TECHNOLOGY FOR TAX COMPLIANCE AND FINANCIAL REGULATION

Blockchain technology has emerged as a disruptive force in the realms of tax compliance and financial regulation, presenting both opportunities and challenges for governments, businesses, and regulators worldwide. This abstract explores the multifaceted legal implications stemming from the integration of blockchain technology into tax systems and financial frameworks. The decentralization and transparency inherent in blockchain networks offer promising avenues for enhancing tax compliance. Smart contracts, powered by blockchain, can automate tax calculations and payments, reducing errors and facilitating real-time monitoring of transactions. Additionally, the immutable nature of blockchain ledgers provides auditors with an unprecedented level of transparency and traceability, potentially reducing tax evasion and fraud. However, the adoption of blockchain technology also poses significant regulatory challenges. The anonymity afforded by certain blockchain implementations raises concerns regarding the identification and verification of taxpayers and transactions, potentially hindering enforcement efforts. Moreover, the cross-border nature of blockchain transactions complicates traditional tax jurisdictional boundaries, necessitating international cooperation and harmonization of tax policies. In the realm of financial regulation, blockchain technology introduces novel considerations for regulators seeking to ensure market integrity and investor protection. The proliferation of blockchain-based financial products, such as cryptocurrencies and tokenized assets, challenges existing regulatory frameworks designed for traditional financial instruments. Regulators must grapple with issues of investor disclosure, market manipulation, and systemic risk in this rapidly evolving landscape. Furthermore, the decentralized nature of blockchain networks challenges the efficacy of traditional regulatory mechanisms, such as centralized oversight and enforcement. Regulators face the daunting task of striking a balance between fostering innovation and safeguarding against potential risks, such as money laundering and terrorist financing, inherent in decentralized financial systems. The integration of blockchain technology into tax compliance and financial regulation presents a complex array of legal implications. While offering potential benefits in terms of efficiency and transparency, blockchain also necessitates adaptation and evolution of regulatory frameworks to address emerging challenges and risks in a rapidly evolving digital landscape. Effective collaboration between governments, businesses, and regulators is essential to harness the transformative potential of blockchain technology while mitigating its associated legal and regulatory challenges.
 Keywords: Blockchain, Regulators, Legal, Tax, Technology, Financial, Review.

How Much Nebraska Ag Land is Owned by Foreign Entities?

The Agricultural Foreign Investment Disclosure Act of 1973 (AFIDA) established a mandatory reporting system, overseen by the USDA, that requires foreign entities to provide information on all U.S. agricultural and non-agricultural land in which they hold an interest. “Interest” is reported as a fee interest (legal possession of both the surface and mineral rights), partial fee interest (must state percent ownership), life estate, trust beneficiary, purchase contract, or other. “Other” includes leases that are 10-years or longer. The regulations exempt foreign entities with interests solely in mineral rights and leases of less than 10 years in duration from reporting. In this report, the terms “owner” and “ownership” will refer to all types of interest held by the foreign entity, including long-term leases. According to the most recent AFIDA report, foreign investment in agricultural lands has increased over the past decade. As of December 31, 2021, just over 30 million acres (3.1%) of agricultural land in the U.S. was held by foreign entities. Texas has the distinction of having the most acreage held by foreign entities (almost 5.3 million acres or 3.4% of Texas’ acreage) but Maine holds the number one spot for the highest percentage of agricultural land held by foreigners (3.6 million acres equating to 20.1% of Maine’s acreage). Canada holds the largest percentage of Maine’s foreign-held acreage for the purpose of timber production (Foreign Ownership and Holdings of U.S. Agricultural Land, 2023).

AI tools for sustainability

People struggle with complex information everywhere: policies and prospectuses are too long, contracts and regulatory requirements confuse, and companies are required to report more and more information. Legal Design tries to tackle these problems by making information more comprehensible. AI tools, such as Open AI’s GPT-3, open up new opportunities to make readers’ and writers’ tasks easier. This paper considers how GPT-3 can help transform sustainability reporting, investment disclosures and contracts so that people and businesses can better understand their rights and obligations, address the causes of ESG problems, and monitor and strengthen sustainability.

Evidence for Accelerating First-time Activist Investor Disclosure: Is More Timely Disclosure Justified?

Evidence for Accelerating First-time Activist Investor Disclosure: Is More Timely Disclosure Justified?

US–China decoupling: Trade war, corporate investment disclosure, and supply chain shift

US–China decoupling: Trade war, corporate investment disclosure, and supply chain shift

INVESTASI DALAM ASET TAK BERWUJUD DAN NILAI PERUSAHAAN

In making decisions and predicting the rate of return on investment, earnings are considered the most relevant financial information. However, the 2008 global economic crisis caused the relevance of the value of earnings to decline and could not be relied on in valuing companies, so investors sought other important information that was useful in making decisions, namely information about investment in intangible assets. Therefore, this study aims to examine the effect of investment in intangible assets on firm value. In addition, this study also examines the factors that influence the disclosure of investment in intangible assets in the manufacturing industry. By using purposive judgment sampling technique, samples obtained for model 1 were 69 samples of manufacturing companies, while samples for model 2 obtained an average of 30 sample companies. The data analysis technique used for hypothesis testing is multiple linear regression analysis. The results of this study indicate that the intangible asset investment variable is not proven to have a significant effect on stock prices. Only company size has a significant positive effect on the disclosure of intangible asset investments while Earnings per Share (EPS) and Leverage have no effect. The results of this study can be concluded that investors consider information about intangible asset investment as irrelevant in valuing company equity. In addition, company size has an important role in expressing investment in intangible assets.

Quality, readability, and narrative aspects of MD&A reports: Literature review and future research potential

This article provides significant insights on what has been done so far in the field of Management Discussion and Analysis (MD&A) and discuss the implications of MD&A disclosures for investors and financial analysts and future research potential in the respective area. Systematic Literature Review method is adopted for the MD&A studies as to categorize them into four different themes: An overview of MD&A structure; Quality of the MD&A disclosures & its forecast ability; Readability of MD&A reports and Narrative of MD&A disclosures. Also, future scope of the research is also discussed. It is found that the MD&A reports are really contributing in decision making of the shareholders and financial analysts in terms of predicting the future accounting results, earning per share, sales and explains going concern opinion according to existing researches, thus demanded to audit the MD&A reports as well to enhance the authenticity. Recent studies have included Artificial intelligence (AI) tool in their studies to provide more reliable results and more future researches can be done with the help of AI.

Comment Letter- SEC File No. S7-10-22- The Enhancement and Standardization of Climate-Related Disclosures for Investors

Comment Letter- SEC File No. S7-10-22- The Enhancement and Standardization of Climate-Related Disclosures for Investors

The Proposed Rules Supporting the Enhancement and Standardization of Climate-Related Disclosures for Investors Are Consistent with the First Amendment

The Proposed Rules Supporting the Enhancement and Standardization of Climate-Related Disclosures for Investors Are Consistent with the First Amendment

Foreign direct investments in U.S. agricultural land

U.S. agricultural land remains attractive to foreign investors. As of December 31, 2020, foreign direct investment in this property amounted to $4.5 million, which is three times higher than in 2014. Foreign individuals and companies currently held an interest in nearly 15.2 million hectares of US agricultural land. This represents 2.9 percent of all privately owned agricultural land in the United States. Almost half of the reported foreign interest holdings of U.S. land are arable land and pastures, with timber and forestland accounting for 46 percent of the total acreage, which are mainly used by timber and "green" energy companies. Canadian investors own the largest amount of reported foreign-held agricultural land, with 32 percent. Foreign persons from an additional four countries, the Netherlands, Italy, the United Kingdom, and Germany collectively held 31 percent of the foreign-held acreages in the United States. The state of Texas has the largest amount of foreign-held U.S. agricultural land. Maine has the second, Alabama - the third largest amount of foreign-held agricultural land. Three states collectively held more than 25% of the reported foreign-held agricultural land in the United States, the vast majority of which is forestland. Current law imposes no restrictions on the amount of private U.S. agricultural land that can be foreign owned. However, several states have imposed certain prohibitions or restrictions on foreign ownership, but do not significantly inhibit foreign farmland ownership, while most states expressly allow foreign ownership. The US government controls direct investment flows. Federal law requires foreign persons and entities to disclose to USDA information related to foreign investment and ownership of U.S. agricultural land. The Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA) and its federal regulations, implemented by USDA, established a nationwide system for the collection of information pertaining to foreign ownership of U.S. agricultural land. At the federal level, the Committee on Foreign Investment (CFIUS) authorized to review certain transactions involving foreign investment in the United States in order to determine the effect of such transactions on U.S. national security.

Correction to: Manager perception and proprietary investment disclosure

Correction to: Manager perception and proprietary investment disclosure

Manager perception and proprietary investment disclosure

Manager perception and proprietary investment disclosure

Corporate venture capital, disclosure, and financial reporting

AbstractResearch Question/IssueCorporate venture capital (CVC) is one of the most important avenues for corporate innovation today, yet there can be unintended consequences related to anticompetitive practices. Recent scrutiny from regulators and policymakers underscores their growing desire for more information about firms' CVC investment activities, even of those previously believed to be too small to matter.Research Findings/InsightsUsing a comprehensive sample of 115 publicly listed US parent firms that owned 133 CVC firms, we document that for almost half of the firm‐years in our sample, parent firms do not disclose any information about their CVC program. Among the parent firms that do disclose their CVC activities, we find that they disclose less when they make investments in industries outside of their core industry. Firms with a CVC program, relative to similar firms without a CVC program, tend to make more future acquisitions and report less future goodwill asset write‐downs.Theoretical/Academic ImplicationsVariation in details of CVC disclosures explained by within‐industry versus outside‐industry investments is consistent with theories on voluntary/discretionary disclosure. Future research can examine other characteristics of CVC investments that explain how parent firms report their CVC activities.Practitioner/Policy ImplicationsThis study documents the current state of affairs with respect to the amount of publicly available CVC information for a large sample of firms, an important starting point for regulators and policymakers to conduct an informed debate about whether disclosure requirements should be expanded. Our focus on investment disclosures can apply to other settings in which the investing public could benefit from greater transparency, such as Special Purpose Acquisition Companies (SPACs).

Reporting and Disclosure of Investments in Sustainable Development

This paper builds upon prior research regarding the quest for a sustainable measuring method. Here, we present a method to integrate sustainability and financial accounting at the level of transaction recording and introduce the concept of environmental debit and credit entry. This concept is illustrated through investment reporting. Identification of the research gap is based on the review of the initial population of 141 research papers and is supported with the European legal framework analysis. Logistic regression on the 500 largest European-based companies justifies the environmental footprint inclusion into the integrated journal entry. This study provides robust data concerning the limitations of the current financial reporting system. Our findings support the conclusion that the currently applied hybrid sustainable disclosure with synthetic ratios, indicators and unstructured narratives failed to provide a comprehensive and auditable picture of a company’s environmental.

ПРОБЛЕМЫ ПРОВЕДЕНИЯ ТЕСТА НА ОБЕСЦЕНЕНИЕ ВЛОЖЕНИЙ ВО ВНЕОБОРОТНЫЕ АКТИВЫ ПОСЛЕ ДЛИТЕЛЬНОЙ КОНСЕРВАЦИИ

The article considers problems associated with disclosure of investments in non-current assets in financial statements after that have been suspended for a long time. Were made recommendations to determine their fair value if there are any indications of impairment. The article uses the following main meth-ods of scientific research: analysis, synthesis, comparison, generalization, etc.

Is the Tone of Risk Disclosures in MD&As Relevant to Debt Markets? Evidence from the Pricing of Credit Default Swaps*

ABSTRACTThis paper examines whether the tone of corporate textual disclosures related to risk and uncertainty conveys relevant information to the credit default swap (CDS) market. Prior studies largely focus on the amount of risk disclosures and provide inconclusive evidence on the usefulness of risk disclosures for investors in assessing firm risk. Using a large sample of textual risk disclosures in the Management's Discussion and Analysis (MD&A) section of 10‐K and 10‐Q filings, I predict and find that the change in CDS spreads over the three‐day window surrounding the 10‐K/Q filing date is positively associated with the pessimism of the language used in the risk disclosures. I conduct several analyses to show that the effect of the tone of risk disclosures is distinguishable from that of the amount of such disclosures. Cross‐sectional analyses reveal that the CDS market reaction to the tone of MD&A risk disclosures is more pronounced for reference entities closer to default, consistent with creditors' particular concern about downside risk. Further, the CDS market reacts more significantly to the tone of MD&A risk disclosures for reference entities with a weaker information environment. Overall, these results support the view that the tone of textual risk disclosures in MD&As has information content for investors in the CDS market in particular and debt markets in general. My findings improve the understanding of textual risk disclosures by showing that the tone and the amount of such disclosures have different implications for debt market investors' risk perceptions.

The Use of Information Communication and Technology (ICT) to Enable Transparency, Accountability, and Participation in Indonesia

This research aims at understanding how ICT as panopticon vision enable transparency, accountability, and Participation in Indonesia. The betterment of these three aspects is believed to be beneficial for the government in fighting corruption. In the transparency aspect, this research has eight indicators which are constructed from studies by Bhatmagar, Davies & Fumega, Park & Florida, Grimmelikhuijsen, Keuffer & Mabillard: (1) the availability of laws and regulations, (2) the availability of government budget allocations and spending, (3) the availability of performance reports, (4) open government processes, (5) identification of elected officials and civil servants under investigation for corruption and fraudulent activities, (6) disclosure of assets and investments of public officials, (7) provision of e-procurement, and (8) using file formats. In the accountability aspect, four indicators from studies of Lee & Kwak and Davies & Fumega are used. They are (1) the availability of social media presence, (2) using mainstream social media for interactive, on-going conversations, storytelling, and communications, (3) the availability of a platform for questions and answers, and (4) the availability of information about feedback from the public. Finally, for the aspect of Participation, three indicators by Lee & Kwak are employed. Those are (1) voting and polling for a decision-making process or a public organization assessment, (2) feedback and ideation platform, and (3) crowdsourcing to report corruption or grievances. This research uses a qualitative research approach. It is benefiting from the use of secondary data as a form of the big data source. Hence, this research is an initial attempt to exploit the availability of big data as a valid data source. To ensure the secondary data sources’ validity, the researchers employed a triangulation process of backgrounds and reference checking. The data analysis in this research is based on 2 ICT based initiatives; Government websites and apps. It is evident from this research finding that, first, there are 35 ICT based initiatives, 31 websites, and four apps. From these numbers, there are only18 websites and four apps that are available. Second, in general, those websites and apps do enable transparency, accountability, and Participation. Another important highlight of the finding is that three unidentified websites and ten websites are unsuccessful in promoting those three aspects. However, most of the websites and apps had turned out a success. In the meanwhile, ICT as panopticon vision also results in new corruption opportunities. This study highlights three examples of new corruption opportunities. It is recommended that Indonesia continue to work on those ten unavailable websites and, more importantly, be cautious and aware of the new corruption modes. Only by doing those, the role of ICT to fight corruption can be more strengthened.

Information Value of the Segment Reporting in the Polish Energy Sector

Abstract Conventional energy sources dominate in the Polish energy sector, which is a huge risk to meeting environmental protection requirements. Polish energy companies are facing challenges related to meeting the requirements of the European Union and the National Energy Policy. The paper attempts to answer the question whether the ongoing discussion on the future of the energy sector, dealing with such issues as development of renewable energy sources is reflected in the annual financial reports of companies listed on the Warsaw Stock Exchange and covered by the WIG_ENERGY index. This study contributes to the extant literature on financial disclosures in several ways. First, the examination of compliance of segment reporting of selected companies listed on the Polish stock exchange with International Reporting Standards (IFRS) was carried out (particularly IFRS 8 – Operating Segments). Second, the information value of disclosures for investors in the energy industry was assessed. The empirical part was preceded by a description of segment reporting principles in accordance with IFRS 8 and the summary of challenges facing the energy sector in Poland.