Mandatory Information Disclosure Research Articles

ACCOUNTING INFORMATION DISCLOSURE: HOW FAR IS SO FAR

Purpose: Accounting information asymmetry increases moral hazard, agency costs, shareholders’ discontent, and further aggravates the discomfort of minority shareholders. As such, how far is so far when connecting information disclosure with firm characteristics has remained a debate. This study thus investigated the nexus between firm characteristics and accounting information disclosure with emphasis on the banking sub-sector in Nigeria.   Theoretical Framework: Accounting information disclosure is not hidden from theoretical discussions within the corridors of opportunistic behaviors, agency-theory and information asymmetry or information failure theory   Design/Methodology/Approach: Annual reports of eleven top banks in Nigeria were analyzed covering a period of 5 years from 2010 to 2014 using the firm characteristics – size, profitability, age, and international presence. A disclosure checklist consisting 137 voluntary items was developed and multiple regression analysis performed.   Findings: The results revealed a positive significant relationship between accounting information disclosure with age, international exposure, and a negative significant relationship was observed for profitability and size. Generally, the level of disclosure in the banking sector was found to be high at 62%.   Research, Practical & Social Implications: This study recommends accounting information democratization and sharing to build and restore confidence in banks’ activities and public perception.   Originality/Value: The investigation on how far is so far in accounting information disclosure should be perceived from the eye of the stakeholders investments. Be that as it may, it is only fair and ethically moral for persons/groups that have invested in a business and or in a bank to regularly have access to concrete and verifiable mandatory and voluntary information disclosure on the financial position of their hard-earn funds to make reasonable decisions.

Voluntary versus mandatory information disclosure in the sequential prisoner’s dilemma

Voluntary versus mandatory information disclosure in the sequential prisoner’s dilemma

Mandatory financial information disclosure and credit ratings

When firms are forced to publicly disclose financial information, credit rating agencies are generally expected to improve their risk assessments. Theory predicts such an information quality effect but also suggests an adverse reputational concerns effect since credit analysts may become increasingly concerned about alleged rating failures. We empirically examine these predictions using a large-scale quasi-natural experiment in Germany, where a new compliance regime required firms to disclose annual financial statements publicly. Consistent with the reputational concerns hypothesis, we find an average increase in credit rating downgrades that is entirely driven by changes in the discretionary assessments of credit analysts rather than changes in firm fundamentals. Following public disclosure regulations, analysts tend to give positive private information less weight in their risk assessments while assigning greater weight to negative public information. A final set of results indicates that professional credit providers recognize that the resulting downgrades are not warranted.

Secrecy of Taxpayer Information and the Disclosure thereof by an Order of Court in Terms of the Tax Administration Act 28 of 2011 and the Promotion of Access to Information Act 2 of 2000

The secrecy provisions of the Tax Administration Act 28 of 2011 (hereinafter, the TA Act) provide that taxpayer information may generally not be disclosed by the South African Revenue Service (hereinafter, SARS). One of the exceptions to the preservation of secrecy is when a court orders disclosure following an application regulated by secs. 69(2)(c), 69(3), 69(4), and 69(5) of the TA Act. This article considers this exception to taxpayer secrecy in terms of the TA Act, with a focus on the circumstances provided in sec. 69(5) of the TA Act, which must be met before the court may order disclosure. This is done by first considering the previous provisions relating to secrecy and the exception thereof by an order of court found in, for example, the Income Tax Act 58 of 1962, which applied before the commencement of the TA Act. The case law on the previous provisions and the more recent cases on the TA Act secrecy provisions are analysed. This article also considers the disclosure of taxpayer information by a court in terms of the Promotion of Access to Information Act 2 of 2000 (hereinafter,the PAI Act), in light of the recent finding by the Constitutional Court in Arena Holdings (Pty) Ltd t/a Financial Mail and Others v South African Revenue Service and Others.1 In this case, the majority of the court declared certain provisions of the PAI Act and the TA Act constitutionally invalid, which results in the mandatory disclosure of taxpayer information when it is in the public interest, as contemplated in sec. 46 of the PAI Act. The PAI Act, in addition to the TA Act, now allows for a court order to disclose information in terms of the public interest procedure if access was refused by SARS. This begs the question: What is the interaction between a TA Act court order to disclose taxpayer information and a PAI Act court order to disclose taxpayer information if the requirements ofsec. 46 of the PAI Act are applicable and if access was refused by SARS?

Mandatory Financial Information Disclosure and Credit Ratings

Mandatory Financial Information Disclosure and Credit Ratings

Effects of mandatory climate-related information disclosure on mutual funds

Effects of mandatory climate-related information disclosure on mutual funds

ESG 생태계와 지속가능성보고서 검증 표준 발전 동향에 관한 연구

The information in the Sustainability Report, covering Environment (E), Social (S), and Governance (G), serves as a crucial reference for stakeholders in the ESG ecosystem, enabling effective decision-making. Consequently, companies bear the responsibility to transparently explain their performance, plans, risks, and opportunities to the capital market. To achieve this, ESG information must adhere to standardized criteria, ensuring comparability across different companies, industries, and nations, and be verifiable by independent third parties.
 Recently, there has been an accelerated global discussion on mandating the disclosure of ESG information. Legal disclosure of ESG information must be grounded in high reliability. When ESG information disclosure activities fall within a legal framework, disclosure actors may be subject to the same level of standardization as business reports. Currently, domestic companies engaging in voluntary assurance will likely require recognized service providers in the future ESG disclosure system.
 This study aimed to derive the qualifications of assurance service providers and propose a quality management approach applicable to the ESG ecosystem. To achieve this, we examined the global ESG ecosystem structure, focusing on the roles and functions of ESG information disclosure standards setters, assurance providers, and evaluators. We also analyzed the characteristics of assurance practices. By researching the qualifications and quality management requirements of assurance providers concerning mandatory ESG information disclosure, we identified the assurance practice standards necessary for improving ESG disclosure quality.
 Assurance service providers should establish business processes in line with global assurance standards and guidance, meeting ethics and quality management standards equivalent to accounting firms. Furthermore, assurance practitioners should possess specified qualifications and practical experience, being recognized for their expertise in the ESG field. The assurance supporting the domestic ESG disclosure mandate should evolve into a public activity open to anyone with suitable qualifications, fostering development.

Is mandatory disclosure an effective panacea for buyer beware?

Purpose The purpose of this paper is to examine whether mandatory disclosure of information accompanying the sale of real estate achieves its aim of informed purchasers. Design/methodology/approach Using a case study approach focused on mandatory disclosure in South Australia data was collected from interviews and focus groups with key personnel in the property industry involved in the production of information required to fulfil vendors’ disclosure obligations. Findings The authors found that purchasers are ill-served by a long and complex form of mandatory disclosure with a short time frame that prevents the use of the information provided. Without good form design and increased digital affordances provided by the cadastral and conveyancing systems, mandatory disclosure is insufficient to ensure minimisation of information asymmetry between vendor and purchaser. Originality/value To the best of the authors’ knowledge, this is the first Australian qualitative study that examines the utility of mandatory vendor disclosure in real estate sales and the first to consider the impact of the digitalisation of cadastral and conveyancing systems upon the efficacy of mandatory disclosure regimes.

The relationship between organizational characteristics and the quality of local government financial statements

This study investigates the relationship between organizational characteristics and the quality of financial statements in Malaysian local government. Organizational characteristics, including status, size, financial stability, tax revenue collection efficiency, and level of competence, were examined to discern their impact on mandatory information disclosure in local government financial statements. Data were collected from 71 local governments in Peninsular Malaysia, representing nearly 74% of the total population, using a combination of secondary data from audited financial reports and official documents, as well as structured questionnaires. The results indicate that tax revenue collection efficiency and the level of competence had a significant positive relationship with financial statement quality. Conversely, organizational characteristics related to status, size, and financial stability did not significantly impact financial statement quality. This implies the greater significance of human resources, precisely tax revenue collection efficiency and account officers’ competence, in shaping local government financial statement quality in Malaysia. These findings support the stewardship theory, confirming the connection between specific organizational characteristics and financial statement quality. However, limitations include relying solely on secondary data and facing certain data collection constraints. Future research can enhance these findings by exploring additional factors through in-depth qualitative or case studies.

A STUDY ON ENVIRONMENTAL INFORMATION DISCLOSURE BY INDIAN GOVERNMENT AND INDUSTRIES

A STUDY ON ENVIRONMENTAL INFORMATION DISCLOSURE BY INDIAN GOVERNMENT AND INDUSTRIES

Mandatory Disclosure of Corporate Social Responsibility and the Quality of Earnings Management

Using the exogenous shock caused by the mandatory corporate social responsibility (CSR) information disclosure policy in 2008, this paper examines the impact of mandatory CSR information disclosure on the earnings management activities of listed firms in China from the perspective of external corporate regulation based on the Difference-in-Differences (DID) method. The results show that mandatory CSR information disclosure can significantly improve the quality of firms’ earnings management. The mechanism analysis shows that the policy’s enhancement of the effectiveness of external regulation by regulators and the media played an important role in curbing firms’ earnings management activities. The heterogeneity analysis shows that the inhibitory effect of mandatory CSR disclosure policy on firms’ earnings management activities is better in firms with lower analyst coverage and lower institutional ownership. The study further extends the mechanism of the impact of mandatory CSR disclosure on firms’ earnings management activities, and provides practical guidance on how to improve the quality of firms’ earnings management and enhance the efficiency of corporate governance.

The impact of implantable cyber-physical systems on the civil legal personality of an individual

The article is devoted to the study of possible changes in the legal personality of an individual with implanted cyber-physical system. When CPS is implanted, all elements of legal personality can be affected. The main impact of the CPS (especially those using strong artificial intelligence technologies) is on the legal capacity of an individual because the CPS can influence the will of an individual. The identification of the CPS as a persona of civil law seems to be premature. The consequences of CPS implantation should depend on the type of CPS, because in the case of non-autonomous CPS, the impact on legal personality is negligible. In the case of a CPS with a fully autonomous artificial intelligence, there is a risk of a conflict of interest between the AI and the person who has the CPS implanted. This situation requires legislative regulation, including the definition of the subject of responsibility and mechanisms for protecting third parties. One of such mechanisms seems to be the mandatory disclosure of information about implanted CPSs. The article also considers the possibility of recognizing an individual with CPS as a complex entity.

Voluntary information disclosure of an e-commerce platform under reselling, marketplace, and hybrid selling

This study investigates an e-commerce platform's incentive to voluntarily disclose demand information to an upstream manufacturer. In contrast to previous studies that emphasize the platform's mandatory (or ex-ante) information disclosure, this study examines voluntary (or ex-post) information disclosure, which allows the platform to selectively decide whether to perform information disclosure based on the level of forecast demand. The typical online selling channels in which the platform or the manufacturer (or both) play the role of seller are identified as reselling, marketplace, and hybrid cases. In each transaction case, the interactions between the platform's information disclosure strategy, the level of forecast demand, the platform's forecasting capability, the degree of demand uncertainty, and channel substitutability are analyzed. We find that information on good market demand should be withheld in the reselling case, information indicating a slightly below-average market condition should be withheld in the marketplace case, and information on good or poor demand should be withheld in the hybrid case. The platform is more likely to perform information disclosure as the forecasting capability or the degree of demand uncertainty increases. Moreover, both the platform and the manufacturer can benefit from a well-formulated voluntary information disclosure strategy. Our findings show e-commerce platforms how to better exploit demand forecast information in a voluntary disclosure setting and provide an explanation for practices such as their focus on improving their forecasting capability and market potential.

The impacts of corporate governance on firms’ performance: from theories and approaches to empirical findings

PurposeThis study aims to investigate the relationship between corporate governance (CG) and financial performance in the case of publicly listed companies in Vietnam for the period from 2019 to 2021. The topic is crucial in understanding how effective governance practices can influence the financial outcomes of companies. The study sheds light on the link between CG practice and firm financial performance. It also provides insights for policymakers and practitioners to improve CG practices.Design/methodology/approachDue to the potential dynamic endogeneity in CG research, this study uses the generalized system methods of moments to effectively address the endogeneity problem. Financial performance is measured by Tobin’s Q, return on equity (ROE) and return on assets (ROA). Based on organization for economic cooperation and development (OECD) standards, these indices were calculated to assess the influence of CG practices on corporate financial performance, namely, for accounting information (ROA and ROE) and market performance (Tobin’s Q and service à resglement différé (SRD) – stock price volatility) for the period 2019–2021. In addition, the study examines the relationship between changes in the CG index and changes in financial performance.FindingsThe study’s main objective is to determine the relationship between CG performance scores and financial performance. The study found a positive relationship between transparency disclosure and financial performance and a positive correlation between CG and company size. The COVID-19 pandemic caused a decrease in transparency and information index scores in 2021 compared to 2019 and 2020 due to delayed General Meetings of Shareholders. The study failed to find a relationship between shareholder rights index (“cg_rosh”) and board responsibility (“cg_reob”) and financial performance, concerning which the findings of this study differ from those of previous studies. Reasons are put forward for these anomalies.Originality/valuePolicymakers need to develop a set of criteria for assessing CG practices. They also need to promulgate specific regulations for mandatory and voluntary information disclosure and designate a competent authority to certify the transparency of company information. The study also suggests that companies should develop CG regulations and focus on regulations relating to the business culture or ethics, as well as implementing a system to ensure equal treatment among shareholders. The study found that good CG practices can positively contribute to a company’s financial performance, which is crucial for investors to evaluate the quality of CG practices for each listed company so that investment risks can be limited.

The juridification of social accounting and the transposition process of the non-financial reporting directive 2014/95/EU

PurposeThis paper aims to critically analyse the transposition implications of Union Directive 2014/95. This Directive identified the need to raise the transparency of the social and environmental information provided by the undertakings to a similarly high level across all Member States.Design/methodology/approachThe paper considers how the European Member States of the European Union (EU) have transposed Directive 2014/95 into their regulations. The focus is on the juridification of social accounting in the pursuit of creating an overlapping consensus through Habermas’s concept of internal colonisation. The paper uses qualitative content analysis to scrutinise the national laws that transpose Directive 2014/95, discussing both what has been accomplished and what can be achieved by the release of future legislative provisions.FindingsDespite the aim of Directive 2014/95 to create a common language for disclosing non-financial information, this study shows an implementation gap among and between Member States and an inconsistent picture of the employment of this Directive. Its implementation in the 28 European countries was considered a process of colonisation in implementing Union directives among European undertakings. However, the implementation process, which exemplifies Habermas’s juridification, has failed due to the lack of balance between moral discourse and actions.Originality/valueThis paper contributes to the ongoing debates concerning the implementation of mandatory disclosure of environmental and social information in the EU Member States, promoting new directions for the EU’s democratic laws on social accounting. In addition, it offers an example of how internal colonisation only catalyses effects when moral laws are legitimised through the provision of procedures.

Quality of Mandatory Social Responsibility Disclosure and Total Factor Productivity of Enterprises: Evidence from Chinese Listed Companies

This study attempts to determine whether improving the quality of mandatory corporate social responsibility (CSR) information disclosure can have a positive impact on a firm’s development. To this end, an empirical analysis is conducted to establish a relationship between the quality of mandatory CSR information disclosure and a firm’s total factor productivity (TFP), using data from A-share listed companies in China over the period 2009–2020. The results show that: (1) Improving the quality of mandatory CSR disclosure leads to a significant increase in a firm’s TFP. (2) By alleviating a firm’s financing constraints and agency costs, the improved quality of mandatory CSR disclosure effectively enhances the firm’s investment efficiency and innovation capacity, leading to higher TFP. This research extends the influence of CSR disclosure on the economic development outcomes of Chinese firms, and provides theoretical guidance for the development and improvement of CSR disclosure mechanisms in emerging economies.

Investor Relations as Strategic Communication: Insights from Evolutionary Psychology

ABSTRACT The investor relations (IR) function emerged from the need to limit information asymmetries between management and shareholders. As a result, the mandatory disclosure of material information is at the heart of the IR task. Over the years, however, investor relations has evolved into a strategic communication function, responsible for a wide array of voluntary disclosure activities, for relationship management, and executive advisory. Empirical studies document the positive impact of these IR efforts on share prices. Notably, these empirical insights point to tensions emanating from a strategic IR role: According to current regulatory frameworks, voluntary communication beyond mandatory disclosures should not be price-sensitive, and thus should not affect corporate value. To date, there is no authoritative theoretical account for the strategic role of investor relations. Some argue that IR shapes investor perceptions through sensegiving, by fostering social ties, or due to investors’ cognitive biases. This contribution proposes that evolutionary psychology allows for a more comprehensive theoretical account of the strategic role of investor relations. It reviews insights from evolutionary psychology and relates them to established concepts and empirical findings from IR research. It discusses avenues for future research and limitations to an evolutionary psychology perspective on strategic investor relations.

Bureaucratic response to performance information: how mandatory information disclosure affects environmental inspections

AbstractInformation disclosure has become a ubiquitous component of contemporary governance. This study examines how disclosure of information about the performance of regulated entities, which also implicates the performance of relevant government agencies, affects bureaucratic behaviors. In the context of the Clean Air Act (CAA)—the primary law that regulates air pollution in the United States—this study shows that regulators significantly increased CAA regulatory inspections on facilities that started to disclose relevant performance information to the public following the requirements of the Toxics Release Inventory (TRI), which is a major environmental information disclosure program in the United States. Additional analyses suggest the increase was because of the disclosure providing new information to regulators instead of mobilizing citizen actions. The findings suggest that performance information about regulated entities can alleviate information asymmetry between bureaucrats and regulated entities and increase the accountability of regulated entities as well as relevant government agencies.

Mandatory information disclosure and innovation: Evidence from the disclosure of operational information

We use a quasi-natural experiment wherein the Shanghai Stock Exchange requires listed companies in certain industries to disclose operational information and a staggered difference-in-differences model to examine the impact of mandatory information disclosure on corporate innovation. We find that companies subject to mandatory operational information disclosure show significantly increased innovation. This effect is pronounced for companies classified as non-state-owned enterprises, facing severe financing constraints and a high degree of shareholder tunneling behavior and in competitive and high-tech industries. Although mandatory operational information disclosure reduces their competitive advantage, companies appear to compensate by increasing innovation. Our study highlights the positive impact of mandatory operational information disclosure, indicating that it contributes to the high-quality development of both capital markets and companies.

Impact of Environmental and Social Disclosure on Return on Asset of Listed Oil and Gas Companies in Nigeria

Purpose: The purpose of this study is to examine the impact of environmental and social disclosure on return on asset of listed oil and gas companies in Nigeria.
 Methodology: The study used expo factor research.  The population of the study comprises of all the thirteen (13) oil and gas companies and eight (8) of those companies made up the sampled population. The study used three variable, the dependent, independent and control variable. ROA is the dependent variable, environmental and social disclosure is the independent variable while firm size and firm age are the control variable. The study used secondary data sourced from annual report and account of the sampled companies for the period 2010 to 2019. To examine the study data, descriptive statistics, correlation matrix and multivariate regression analysis were used.
 Findings: The study revealed that environmental and social disclosure have negative impact on return on asset (ROA) of listed oil and gas companies in Nigeria.
 Unique Contribution to Theory, Practice and Policy: The study recommended that there should be proactive effort from policy makers like National Environmental Standards and Regulations Enforcement Agency and other standards setting bodies to introduce a standard framework for mandatory disclosure of corporate environmental information.