Disclosure Quality Research Articles

Credit confidence: the impact of disclosure quality and audit quality on bank ratings in emerging economies

PurposeThis study aims to examine how banks’ credit ratings can be driven by the quality of the disclosed financial and nonfinancial information in emerging economies.Design/methodology/approachUsing a sample of 1,590 bank-year observations of 29 Islamic and 77 conventional banks across 17 MENA countries from 2006 to 2020, we conducted a random-effects regression model that is supported by various methods, including 2SLS and GMM models, to overcome the potential incidence of endogeneity concerns.FindingsWe found that the quality of voluntary disclosure positively influences the credit rating of Islamic and conventional banks. Although the spread and usefulness of disclosed information are positively associated with banks’ ratings, the quantity dimension is not. Audit quality also significantly influences Islamic banks’ credit ratings compared to their traditional counterparts.Practical implicationsOur evidence offers practical implications for regulators and standards setters in emerging economies to develop more effective disclosure regimes to enhance the impact of the quality of banks’ voluntary disclosures on their credit ratings.Originality/valueOur paper contributes to the existing literature by investigating the effect of the quality of voluntary disclosures on credit ratings along three dimensions: quantity, spread and usefulness of the information. Further, our research contributes to the international accounting literature by investigating the effect of audit quality on the credit ratings of both conventional and Islamic banks in a cross-country setting.

Governance for a greener Europe: audit committee and carbon emission

Purpose This study aims to examine the impact of Audit Committee (AC) characteristics on carbon disclosures and performance among companies listed in the STOXX Europe 600 index. Design/methodology/approach The sample consists of companies listed in the STOXX Europe 600 index over a 11-year period (2012–2022). The study uses panel data regression methods and uses the two-step system generalized method of moments to control for endogeneity. Findings The results indicate that AC size, independence and financial expertise positively influence carbon disclosure, highlighting the significance of these characteristics in promoting transparency and accountability in reporting carbon emissions. Additionally, these attributes are significantly associated with improved carbon performance, suggesting their potential role in advancing environmental sustainability. Practical implications The study provides practical insights for policymakers and regulatory bodies aiming to enhance carbon-related practices through improved corporate governance (CG) structures. By emphasizing the importance of specific AC characteristics, the findings suggest pathways for enhancing the quality of carbon disclosures and performance. Originality/value Despite extensive attention on CG in promoting sustainability, the specific influence of AC characteristics on carbon disclosures and performance remains underexplored. This study addresses this significant literature gap and, to the best of the authors’ knowledge, is the first to link AC characteristics with both carbon disclosure and performance. It enriches the current body of knowledge in agency theory and provides critical insights for developing CG and regulatory policies that enhance the quality of carbon disclosures.

Board Supervision Capability and Sustainability Report Disclosure Quality: Evidence From Small‐ and Medium‐Sized Enterprises in Taiwan's Construction Industry

ABSTRACTThis study explores the effect of board supervision capability on sustainability reporting quality among publicly listed small‐ and medium‐sized enterprises in Taiwan's construction industry from 2018 to 2022. Ordinal logit regression analyses are conducted. The results reveal that board supervision capability determines whether a firm will voluntarily engage in sustainability reporting strategies, which is a key factor for effectively meeting stakeholder needs. Further analysis of board supervision capability in firms of different ages indicates that the relationship between board supervision capability and sustainability reporting quality varies by firm age. This study also provides empirical evidence confirming that board supervision capability is among the key factors affecting sustainability reporting quality.

Unveiling the hidden risks of government subsidy reliance: evidence from stock price crashes

ABSTRACT We develop a novel index to quantify the extent to which firms’ key operations – such as investment, efficiency, innovation, and liquidity – depend on government subsidies . Using data from Chinese listed firms (2007-2021), we find that a 1% increase in this index is associated with a 2.6% rise in ex-post stock price crash risk, except for subsidies in the form of tax rebates. To address endogeneity, we employ a DID approach leveraging China’s anti-corruption campaignand an IV approach using proximity to subsidy offices and city-level fiscal capacity as instruments. The effect is stronger in financially constrained firms and those with lower institutional holdings. Robustness checks confirm these findings. Channel analysis identifies information disclosure quality and operational risk intensity as key mechanisms. Our results highlight hidden risks of government subsidies for stock price stability, offering practical insights for managers of subsidy-dependent firms and policymakers.

Impact of environmental award and financial performance on environmental disclosure quality: a case study of listed companies in Pakistan

Impact of environmental award and financial performance on environmental disclosure quality: a case study of listed companies in Pakistan

Adaptation and Challenges: The State, Impact, and Corporate Implementation of Global ESG Disclosure Regulations

In the current global context, the disclosure of Environmental, Social, and Governance (ESG) information has emerged as a crucial factor influencing investment decisions and corporate evaluations. This has led to strengthened regulatory requirements aimed at enhancing the transparency and quality of disclosures. This paper thoroughly investigates the regulatory frameworks for ESG information disclosure and the challenges faced by companies in adapting to these regulatory demands. It analyzes how regulatory bodies formulate and implement policies, as well as how companies respond to these policy requirements. Employing a comparative research approach, this paper analyzes the ESG information disclosure regulatory policies across different countries and regions, uncovering the key elements of effective regulatory practices and the differences between regions. Additionally, through case studies, this paper deeply explores the main challenges companies face in complying with ESG information disclosure requirements, such as the complexity of data collection and processing, inconsistencies in performance evaluation standards, and the issues related to the cost and benefit assessment of disclosure. By systematically analyzing the interaction between regulatory frameworks and corporate practices, this paper aims to guide companies in effectively dealing with the complexities of global ESG information disclosure, while also providing references for regulatory bodies to develop more effective policies.

Systematic Literature Review: Inconsistencies and Developments in Ownership Structure and Board Characteristics in Sustainability Reporting

This study employs a Systematic Literature Review (SLR) method to analyze inconsistencies and developments in ownership structure and board characteristics concerning sustainability reporting. Sustainability reporting has emerged as a pivotal tool for corporations to showcase their economic, social, and environmental responsibilities. However, significant discrepancies exist in the relationship between ownership structures, board attributes, and the quality of sustainability disclosures globally. Drawing upon 37 relevant articles published between 2015 and 2024, this research identifies critical trends and gaps. Ownership structures, including foreign, institutional, and family ownership, show varied impacts on sustainability reporting across developed, developing, and mixed-economy countries. For instance, foreign ownership often drives transparency in developing nations due to external pressures, while governmental ownership exhibits mixed effects depending on regulatory and market dynamics. Similarly, board characteristics like gender diversity, independence, and the presence of sustainability committees significantly influence the quality of sustainability disclosures. These relationships, however, are subject to regional governance maturity and cultural norms. The study highlights the dominance of quantitative methodologies in existing literature, with limited exploration of mixed-method approaches. Findings also reveal that inconsistencies in results are rooted in differences in regulatory environments, market pressures, and cultural expectations. Developed nations exhibit greater adherence to stringent sustainability standards, while developing countries face challenges in harmonizing local priorities with global frameworks. By addressing these inconsistencies, this research contributes to advancing the understanding of ownership and governance dynamics in sustainability reporting. It also underscores the need for globally harmonized reporting standards to ensure consistent, high-quality sustainability practices.

Stakeholder Pressure, External Assurance, Firm Size, And Sustainability Report

This study aims analyze the impact of stakeholder pressure, use of external assurance, and size of the company on the quality of the sustainability report disclosure on the company go public. The data used in this study are secondary data obtained from the annual financial statements and stand alone sustainability reports of companies listed on the Indonesian Stock Exchange for 2019-2022. The analysis method used was a double linear regression analysis with the help of SPSS 25. The results showed that environmental pressure, investor pressure, the use of external assurance, and the size of the company had a positive impact on the quality of the sustainability report disclosure.

The Impact of Digital Transformation on ESGEvidence from the Listed Companies in China

In the digital economy era, the influence of digital transformation on enterprises' ESG performance has received extensive attention. This article selects Chinese A-share listed companies from 2010 to 2022 as samples, constructs a digital transformation index encompassing five dimensions: artificial intelligence, big data, cloud computing, blockchain, and digital technology application, and employs the ESG rating data from Huazheng to measure enterprises' ESG performance. The research discovers that digital transformation significantly and positively affects enterprises' ESG performance. Particularly when external supervision is relatively weak, its promoting effect is more pronounced. Digital transformation enhances enterprises' risk-taking capacity by optimizing resource allocation, strengthening green technology innovation, and improving the quality of information disclosure, thereby elevating enterprises' value creation ability. This article expands the literature research on the influencing factors of enterprises' ESG performance from the micro level of digital transformation, which holds significant importance for improving the digitalization strategies and governance systems of listed companies, further standardizing corporate governance, and enhancing enterprise value.

Gender diversity and disclosure: a meta-analysis

Abstract The significance of Gender diversity in enhancing quality of reporting has been a focal point of the theoretical and empirical research in recent decades. However, discrepancies persist between empirical findings and theoretical perspectives regarding the role of female representation in improving disclosure quality. This study aims to elucidate the relationship between female representation and disclosure. This study employs a series of meta-analyses techniques on 189 empirical studies spanning over 39 countries to investigate the relationship between female representation and disclosure. It further examines how gender parity, shareholder protection, types of disclosure, and publication quality moderate this relationship. The meta-analysis results indicate that female representation is significantly positively associated with disclosure. This positive association is more pronounced in countries with high gender parity and low shareholder protection, underscoring the crucial monitoring role female representation can play in safeguarding shareholders’ interests, particularly when women have greater influence in boardroom decision-making (i.e., gender parity). Additionally, the findings reveal that female representation is more significantly associated with social and environmental disclosure than with financial and governance disclosure. The study provides valuable insights for regulators, directors, and shareholders by advocating for the empowering of female representation and increasing the representation of women in senior positions within firms.

Licence to operate: The institutionalisation of Australian company annual reports, 1910–2018

Annual reports are crucial for corporate accountability, and for firms to obtain their social licence to operate. Although research has identified the internal company drivers of annual reporting, we know less about the way Australian annual reports developed as a long-term, collective practice. Through a historical, cross-sectional content analysis, this article examines the impact of external institutional pressures on the annual reports of large Australian corporations. Interpreting the results with new institutional theory (NIT), I find that coercive pressure from company regulations and societal expectations, and normative pressures from the accounting profession, have improved standards of corporate accountability. Simultaneously, normative pressures encouraged companies to use annual reports for corporate public relations. This has contributed to annual reports that are homogenous in content but with conflicting audiences and objectives. The analysis highlights the institutionalisation and historical path dependencies of annual reports and contextualises current concerns over disclosure quality and transparency.

Mutual fund shareholdings and performance: A network perspective

ABSTRACT Mutual fund shareholdings build up complex relations between funds and can impact fund performance as well. We focus on the Chinese mutual fund market to examine the relationship between mutual fund shareholdings and performance. Specifically, we describe the complex shareholding relations from a network perspective and investigate the effect of the shareholding network on fund performance. Our results indicate that the fund performance is positively related to its centrality in the shareholding network. This performance enhancing effect can be attributed to informational channels through which the funds in more central positions can possibly improve their performance. Further analyses show that the central positions tend to provide more access to firm-specific information (access effect), influence the holding behaviours of non-central funds (transmission effect) and improve information disclosure quality (quality effect). These findings offer regulatory agencies and fund investors an alternative perspective for assessing the role and performance of mutual funds in the capital market.

Media Pressure, Corporate Governance Structure, and Disclosure Quality

This paper selects data from Chinese listed companies from 2012 to 2022 as samples to investigate the relationship between media pressure, corporate governance structure, and information disclosure quality. The research findings are as follows: Media pressure is conducive to promoting enterprises to improve the quality of information disclosure; a reasonable corporate governance structure can help enterprises enhance the quality of information disclosure; management efficiency plays an important moderating role in the relationship between media pressure and the quality of enterprise information disclosure; corporate governance structure exerts a significant moderating effect in the relationship between media pressure and information disclosure quality; there is heterogeneity in the impact of media pressure on the quality of information disclosure between state-owned enterprises and non-state-owned enterprises; and there is heterogeneity in the impact of corporate governance structure on the quality of information disclosure between state-owned enterprises and non-state-owned enterprises.

ESG rating divergence and stock price crash risk

This study aims to explore the impact of ESG rating divergence on firms’ stock price crash risk. Using ESG ratings from six different agencies, we find that a greater divergence in ESG ratings significantly lowers the likelihood of future crash risk. Specifically, the mechanism by which ESG rating divergence reduces crash risk lies in the fact that it triggers more investor attention as well as improves the quality of voluntary corporate disclosure. Further cross-sectional tests reveal that the negative impact of ESG rating divergence on crash risk is more pronounced when managers are more likely to conceal bad news. Finally, we also find that the relationship between the two is moderated by firm size and ownership structure. This paper offers new insights into how ESG rating divergence impacts firms’ capital market performance.

Can green investors improve the quality of corporate environmental information disclosure?

Can green investors improve the quality of corporate environmental information disclosure?

Data elements and corporate stock dividends: A quasi-natural experiment based on government data openness

Based on data from Chinese A-share listed companies from 2000 to 2022, and using the launch of government public data openness platforms as a quasi-natural experiment, this study employs a difference-in-differences model to examine the impact of public data openness on stock dividend policies and its mechanisms. The study finds that public data openness platforms lead to a decrease in both the scale and willingness of companies to distribute stock dividends. The construction of government digital platforms increases financial regulatory levels and improves information disclosure quality, which suppresses the motivation to cater to stock dividend preferences, resulting in a reduction in stock dividends. Heterogeneity analysis shows that companies with higher debt financing costs experience a mitigated negative impact of digital platforms on stock dividends; meanwhile, companies with higher analyst and media attention see a more pronounced negative impact of public data openness platforms on their stock dividends. Compared to state-owned enterprises, the negative impact of public data openness platforms on the scale and willingness of non-state-owned enterprises to issue stock dividends is more pronounced.

Can digital transformation help alleviate corporate financial redundancy?

This paper examines the relationship between digital transformation and corporate financial redundancy. Based on listed firms from 2012 to 2022, this paper adopts a two-fixed model to explore digital transformation's effects and underlying mechanisms on corporate financial redundancy. The findings reveal that digital transformation can effectively reduce financial redundancy, and the impact is achieved by improving internal control management and information disclosure quality and alleviating executives` agency costs. Heterogeneous analysis explores how enterprises` ownership and life cycle affect different policy effects. Specifically, non-state-owned firms and firms that are growing and maturing benefit more from digital transformation. The findings offer valuable insights for the government in formulating policies related to digitization and for firms in implementing digital transformation.

From Translucency to Transparency: Strategic Blockchain Adoption for Quality Disclosures in Supply Chains with Competing Manufacturers

From Translucency to Transparency: Strategic Blockchain Adoption for Quality Disclosures in Supply Chains with Competing Manufacturers

Two-stage quality disclosure with demand reference-dependent preference

Two-stage quality disclosure with demand reference-dependent preference

Effect of Corporate Social Responsibility Disclosure on Corporate Financial Performance in An Emerging Market

This study examines the relationship between corporate social responsibility (CSR) disclosure and financial performance among listed firms in Chengdu, China. Using the Chinese Academy of Social Sciences (CASS)-CSR 4.0 standard, we analyzed the extent and quality of CSR disclosures for 68 firms over the 2019–2020 period. To address endogeneity, we employed Ordinary Least Squares regression (OLS) regression and Two-Stage Least Squares (2SLS) estimations with two novel instruments. The findings reveal a positive correlation between CSR disclosure and accounting-based metrics such as Return on Assets (ROA) and Earnings per Share (EPS), while a negative relationship with Tobin’s Q underscores the complex dynamics with market valuation. Building on these insights, the study suggests policymakers incentivize voluntary CSR disclosures through tax benefits or regulatory advantages and consider mandating specific CSR information based on CASS-CSR and Global Reporting Initiative (GRI) frameworks. This approach could help enterprises define disclosure boundaries, enhance transparency, and foster accountability, offering valuable insights into the CSR-financial performance nexus in the emerging economy.