Disclosure Quality Research Articles

The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Value: An Asymmetric Information Perspective in Indonesian Listed Companies

The research explored how Environmental, Social, and Governance (ESG) disclosure impacted company value, with information asymmetry as the mediator. Data collection involved content analysis of sustainability and annual reports, supplemented by market data, including quarterly stock prices collected immediately after the publication of the sustainability report. The measurement for ESG disclosure used the index scoring method with disclosure indicators based on technical guidelines from SEOJK No. 16 of 2021. Meanwhile, measuring information asymmetry applied the bid-ask spread formula, and company value employed the approximate Tobin's Q formula. Then, market data utilized quarterly stock prices taken in the period immediately after the sustainability report was published to observe market reactions reflected in stock price movements. The population consisted of public companies listed on the Indonesian Stock Exchange from 2019 to 2021, with purposive sampling by selecting only companies that provided information relevant to ESG indicators. Data collection resulted in 286 analysis units from 109 companies. Using SPSS 27.0 and the Hayes Macro process for path analysis, the findings indicate that ESG disclosure has no impact on information asymmetry. Similarly, information asymmetry does not affect firm value or mediate the relationship between ESG disclosure and firm value. However, it should be noted that ESG disclosure has a negative impact on company value. The novelty of the research lies in the use of instruments to assess the quality of ESG disclosure and the utilization of information asymmetry as a mediator between ESG disclosure and company value.

BOD characteristics and their impact on the link between ESG disclosure and integrated reporting disclosure quality: a study of Egyptian non-financial firms

AbstractThis study examines the impact of environmental, social, and governance (ESG) disclosure on integrated reporting disclosure quality (IRDQ) and the moderating role of board of directors (BOD) characteristics. Prior research on ESG disclosure and IRDQ has been limited, especially in emerging economies like Egypt. Furthermore, the influence of BOD attributes has been underexplored. This study aims to address these gaps. A sample of 34 Egyptian non-financial companies under ESG disclosure mandates from 2015 to 2021 is analyzed using regression analysis. The results show a significant positive association between ESG disclosure and IRDQ. Furthermore, BOD gender diversity and size are found to positively moderate the ESG–IRDQ relationship. These findings highlight that appointing more women on boards and increasing board size can improve IRDQ when firms engage in ESG disclosure. However, the small sample size of ESG-mandated companies and inherent limitations in constructing disclosure indices constrain the generalizability of results. Overall, this study provides timely empirical evidence on ESG adoption within the unique Egyptian context and its influence on integrated reporting (IR). It contributes to literature by identifying specific BOD characteristics that enhance IRDQ. The results offer practical insights into how companies, regulators, and stakeholders can leverage board diversity and size as well as ESG disclosure to improve IRDQ.

CEO-executive connections and auditor resignations

ABSTRACT This article examines the impact of connections between the Chief Executive Officer (CEO) and other executives on auditor resignations. Prior literature documents both the positive and negative effects of CEO-executive connections on financial disclosure quality. However, there remains a lack of understanding regarding whether auditors perceive CEO-executive connections as a factor that potentially increases or decreases audit risk. To address the gap, this study investigates the association between CEO-executive connections and the likelihood of auditor resignations. The results based on 19,452 firm-year observations of S&P 1500 firms from 2004 to 2015 show that CEO-executive connections, especially visible connections, are positively associated with auditor resignations. Moreover, the association is more pronounced for firms with poor oversight over the financial reporting process and management. This suggests that CEO-executive connections are an audit risk factor that heightens the inherent and control risks of the firm, which can be mitigated through effective oversight mechanisms. This study contributes to the auditing literature by investigating an unexplored determinant of audit risk, that is, CEO-executive connections, and highlights the need to evaluate the management-related factors that could potentially heighten risks for auditors and regulators.

Assessing the impact of government-led green supply chain demonstration on firms' financial distress: The role of environmental information disclosure quality and supply chain concentration

Amidst the global advancement of sustainable production, the green supply chain initiative is becoming increasingly significant in harmonizing environmental and economic interests. This study delves into the financial implications of such initiatives, focusing on a particular government-led green supply chain demonstration project. Utilizing a difference-in-differences model and data from firms involved in the project between 2010 and 2021, findings indicate a notable reduction in firms' financial distress. This result, framed within the resource-based view perspective, shed lights on how green policy value permeates a company's internal capabilities, aligning environmental goals with financial performance. Additionally, we found that when companies enhance the quality of their environmental information disclosure and decrease the concentration of their supply chain, the inhibitory effect of this demonstration policy on financial distress is amplified. This underscores the pivotal value of enhancing information transparency and maintaining a flexible supply chain structure in green supply chain practices. In conclusion, this study emphasizes the empirical link between sustainable operations and financial resilience, laying a strong theoretical groundwork for businesses to proactively adopt green practices and aiding in the government's crafting of environmental policies.

Exploring the carbon emission reduction effects of corporate climate risk disclosure: Empirical evidence based on Chinese A-share listed enterprises

This study reexamines the need for Chinese enterprises to disclose climate risk information in the context of their significant contribution to climate change. The paper proposes climate risk disclosure indicators based on a sample of Chinese A-share listed companies from 2010 to 2020 and their annual reports. It explores the relationship and influencing mechanism between corporate climate risk disclosure and carbon emissions levels. The results of empirical research show that disclosing climate risk information reduces carbon emissions levels, and this mitigating effect is significantly enhanced by the moderating effects of executive environmental experience, investor attention, and government environmental supervision. Heterogeneity analysis further indicates that state-owned enterprises, those with a solid corporate green culture, or industries with high pollution emissions can better exert the carbon emission reduction effect of climate risk disclosure. In addition, physical climate risk disclosure is preferred in terms of short-term carbon emissions. In contrast, transformational climate risk disclosure is selected for long-term carbon reduction goals. Finally, empirical economic analysis indicates that high-quality climate risk disclosure can appropriately mitigate the negative impact of corporate carbon emissions on solvency and profitability compared to firms with lower disclosure levels, highlighting the importance of climate risk disclosure quality.

The impact of the Belt and Road Initiative on green innovation and innovation modes: empirical evidence from Chinese listed enterprises

Under the Belt and Road Initiative (BRI), promoting green innovation in enterprises has been the central focus of the developmental strategy for China and countries along the Belt and Road to ensure sustainable development in line with the UN Sustainable Development Goals (SDGs) related to the environment and development. This paper examines the driving factors and heterogeneous mechanisms of the BRI in green technology innovation, especially in collaborative vs. independent innovation modes, utilizing a multi-period difference-in-difference model (DID) and micro-level panel data of Chinese listed enterprises spanning from 2007 to 2021. We find that the BRI has significantly stimulated the number of green innovations of participating enterprises, primarily through the adoption of collaborative innovation mode, and the BRI policies are more likely to induce green innovation behavior of enterprises with high research and development (R&D), high quality of environmental information disclosure, and non-state-owned enterprises (SOEs), as well as in heavy-polluting industries. The implementation of the BRI has led to increased support from the government, financial institutions, and scientific research organizations to the participating enterprises, which helps alleviate their financial constraints and enhance patent transformation efficiency, and thus facilitate green innovation. These results are robust across different regression specifications. This study contributes to the existing literature on BRI’s environmental impact and green innovation with firm-level evidence, and has important policy implications for the Chinese government when promoting green innovation and internationalization of Chinese enterprises.

Impact of Disclosure Violations on Information of Listed Companies -- Taking Guangdong Bobaolon Co., Ltd. as an Example

At present, Chinas economy is developing rapidly, but at the same time, the situation of major listed companies in the trading market is also frequent, further optimisation and improvement of the capital market related regulations, the relevant departments to improve the information disclosure of listed companies related system, the companies strictly according to the standards of disclosure and consciously accept the supervision has gradually become the majority of investors desire. This paper is based on the analysis of the information disclosure violation incident of Guangdong Bobaolon Co., Ltd. on 19 March 2021, using short-term event research method and other methods to study the consequences of listed companies information disclosure violation incidents. It is found that listed companies disclosure violation events will have a negative impact on the companys share price, solvency, profitability, etc., as well as affecting the quality of the companys subsequent disclosure and analysts evaluation. Therefore, relevant measures need to be taken.

Advance selling strategy and pricing decisions with online reviews

AbstractMotivated by marketing practices in advance selling, this paper studies the optimal pricing decisions and advance selling strategy with online reviews. The firm may charge a full or partial price in advance selling and then determine whether to continue selling products in the spot market. We characterize the equilibrium pricing decisions, selling scheme, and advance selling strategy in the monopoly market. We find that no matter what kind of advance selling strategy is implemented, the firm should choose the two‐period selling scheme instead of the one‐period one to market the product. Notably, when the two‐period selling scheme is chosen, either the skimming pricing or the penetration pricing may be optimal for the firm. Specifically, when the review valence is significantly lower, the skimming pricing is always favored by the firm; otherwise, the penetration pricing is more profitable. Moreover, the disclosure quality and review valence jointly affect the choice of firm's optimal advance selling strategy. In detail, advance selling with a full‐price strategy is always dominant if the disclosure quality is high; otherwise, the firm's optimal advance selling strategy is determined by the review valence. Meanwhile, we also analyze several extensions to explore meaningful insights and provide decision‐making support for the firm facing a complex marketing environment.

Corporate performance modeling through disclosure quality at the level of developing countries in Southeast Asia

The disclosure quality (DQ) of financial statements in Southeast Asian firms remains poorly understood, with its impact on performance yet to be empirically determined. Our study thus investigates the influence of DQ on corporate performance (CP) among listed firms, examining the moderating effects of managerial myopia (MM) and corporate governance (CG). Employing quantitative methods and data from Thomson Reuters DataStream, we analyze a ten-year dataset of firms listed on stock exchanges in six developing Southeast Asian nations during the period 2012–2021 using the generalized method of moments (GMM) estimation. Our findings support a positive effect of DQ on CP, consistent with agency theory, while also highlighting the moderating roles of MM and CG. We advocate for constraints on MM and strengthened CG mechanisms to enhance the effect of DQ on CP. Our study contributes new insights rooted in agency theory, providing comprehensive explanations for the effects of MM and CG on the DQ-CP nexus. Investors can leverage these insights by utilizing DQ and CG as forecasting indicators for future CP. Furthermore, future research could broaden the scope by including additional developing nations to yield more comprehensive findings.

Impact of Blockchain Technology on the Quality of ESG Information Disclosure

With the increasingly serious global environmental pollution problem, the ESG system established on the sustainable development theory has attracted the attention of all the countries. Compared with the effect of ESG information disclosure practice in western countries, ESG information disclosure practice in China is facing great challenges. Due to the inconsistency of the disclosure forms and disclosure standards of ESG information, the phenomenon of ESG information greenwashing cannot be effectively suppressed. From the perspective of ESG information collection, integration and verification, this paper analyzes the key factors restricting the quality of ESG information disclosure. The distributed accounting technology, across-chain interaction technology, and the characteristics such as imtamability and traceability of the Blockchain can effectively deal with the above constraints. By establishing a private chain within the enterprise, which is interacting with multiple external alliance chains, the enterprises can improve the quality of ESG information disclosure.

Revealing or concealing: The impact of environmental penalty spillover effects on corporate environmental information disclosure

Abstract As a way of environmental protection, environmental administrative punishment affects the environmental decision-making of enterprises to a certain extent. This paper proposes the industry spillover effect of environmental administrative punishment, utilizes the variable factors affecting the quality of corporate environmental information disclosure, and puts forward the hypothesis of the relationship between the spillover effect of environmental punishment and the level and quality of environmental information disclosure, whether it is “displaying” or “disguising”. Companies listed in the heavy pollution industry are selected as research objects to test the relevance of each influencing factor on environmental information disclosure. The double-difference method is used to construct the regression model to verify the influence of government regulation on the level of environmental information disclosure, analyze the impact of environmental information disclosure level on the market value of enterprises, and the relationship between environmental administrative penalties and environmental information disclosure. The regression equation passed the F-test with an adjusted R 2 of 0.425 and the coefficient of EDI of 0.362. It passed the 1% significance level test, indicating that the level of environmental information disclosure is positively related to enterprise value. The higher the level of disclosure of the environment, the higher the market value. Whether the listed company is engaged in legitimacy management or impression management, manipulating environmental disclosure during this period has an impact on the level and quality of environmental disclosure.

A tool for measuring integrated reporting quality: The case of listed companies in the emerging market

This study aims to develop an innovative weighted alternative polychotomous accountability index (PAI) tailored to assess both the extent and quality of information disclosure within integrated annual reports (IARs) of South African listed companies. The study utilised a qualitative approach based on the Delphi technique. The study culminates in a weighted PAI comprising eight comprehensive categories housing 44 distinct constructs. The resulting PAI achieves a cumulative weight capacity of 100% and a total scoring potential of 152 points. The developed PAI addresses limitations in current measurement tools, providing an advanced means to evaluate IAR disclosure quality and extent. The study contributes to the literature by constructing a valid, contextually relevant PAI that aligns with integrated reporting (<IR>) requisites and the socio-political context of a specific country. This study’s findings hold the potential to significantly impact integrated reporting practices and enhance corporate transparency within the context of emerging markets and beyond.

National institutional context and voluntary carbon disclosure: An international study of the banking industry

The determinants of banks' voluntary environmental disclosure have been little studied in the literature. Drawing from the assumptions of institutional theory, this paper analyzes the impact of the national context, including the general legal system and the environmental policy of states, on banks' carbon disclosure. Based on three international samples, the results show a positive relationship between the strength of the legal system (degree of law enforcement), the stringency of environmental regulations, environmental performance, and the quality of banks' carbon disclosure.

Does Green Finance Policy Contribute to ESG Disclosure of Listed Companies? A Quasi-Natural Experiment from China

In 2016, the People’s Bank of China (PBC) together with multiple departments issued the Guidance on Building a Green Financial System (the Guidance), which marked a great breakthrough in China’s green finance policy. Aiming to clarify the actual impact and underlying mechanisms of green finance policy on Chinese listed companies’ ESG disclosure quality, this study employs the difference-in-differences (DID) model and examines the impact of the Guidance on ESG disclosure practices of A-share listed companies on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) during the period 2006 to 2022. This study reveals a positive correlation between the Guidance and listed companies’ ESG disclosure. Upon further examination, it becomes evident that the Guidance has a more noticeable positive impact on the quality of ESG disclosure among listed companies that operate in industries with high levels of pollution, state-owned enterprises, and regions that exhibit greater levels of economic development. This paper provides essential insights to policymakers, facilitating a deeper understanding and more thorough assessment of the economic implications of green finance policies. Additionally, it acts as a strategic resource for listed companies, guiding the enhancement of corporate ESG disclosures and the implementation of ESG strategies influenced by green finance policies.

Forward Looking Disclosure and Its Determinants: Empirical Evidence from the Listed Banks of Bangladesh

Forward looking information is an emerging issue in academic and corporate arena. Today’s dynamic and competitive business world, the disclosure of forward looking information gives competitive advantages. The main objective of the study is to empirically find out the extent of forward looking disclosure and it’s determinants in the banking sector of Bangladesh. To conduct the study total 120 firm years are considered as sample from 30 listed banks from DSE as sample during the period 2017 to 2021. The average mean value of forward looking information is 38% which indicates poor quality of forward looking information in the most regulated sectors of Bangladesh. The results using multivariate regression analysis shows that board independence, audit firm size and firm’s profitability have positive and significant relationship with forward looking disclosure index (FLDI). This study also finds that foreign ownership, board size and audit independence have significant negative relationship with FLDI. But this study didn’t find any significant association of forward looking information with firm size, female board members, sponsor /directors in the banking sector of Bangladesh. To the best of our knowledge, there is scarcity of research that has been examined the disclosure of forward looking information and it’s determinants in banking sector of Bangladesh as well as very limited work is done in other sectors. The study will contribute to the existing scarce literature and may influence the policymakers and regulators to incorporate regulations to increase the quality and extent of forward looking disclosure.

Valuation effect of the extent and quality of corporate sustainability disclosure across sectors in Nigeria

Valuation effect of the extent and quality of corporate sustainability disclosure across sectors in Nigeria

Managerial overconfidence and corporate information disclosure

By extracting detailed birth information for managers of Chinese listed firms from 2011 to 2021, we developed a novel measure of overconfidence and applied it to the corporate information disclosure. Our findings demonstrated a close association between managerial overconfidence and both mandatory and voluntary disclosure behaviors exhibited by firms. Specifically, managerial overconfidence significantly contributed to an increase in accrual-based earnings management and the voluntary disclosure of Corporate Social Responsibility (CSR) information by firms. Furthermore, we observed that overconfident managers were more inclined to adopt a positive disclosure tone and tend to underestimate future risks in forward-looking information disclosure. In our additional analysis, we uncovered evidence suggesting that various factors, including corporate governance practices, the types of actual controllers, financing constraints, analyst following, and market competition, might all play a role in influencing corporate information disclosure behavior driven by managerial overconfidence. This study expands on the economic implications of the Upper Echelons Theory and offers pertinent recommendations to enhance the quality of information disclosure.

The impact of stock liquidity on corporate environmental information disclosure: Does climate risk matter?

<p>From the perspective of the Chinese market microstructure, we took Chinese A-share listed companies as samples to explore the impact and mechanism of stock liquidity on the quality of corporate environmental information disclosure (EID). Our results indicated that stock liquidity has a positive impact on the quality of corporate EID. Using the stock market interconnection events of the 2014 Shanghai-Hong Kong Stock Connect and the 2016 Shenzhen-Hong Kong Stock Connect as a quasi-natural experiment and applying the Ⅳ approach, the research results remained robust after controlling for endogeneity issues. Moreover, both climate physical risk and climate transition risk positively regulated the relationship between stock liquidity and the quality of corporate EID. Further analysis revealed that the positive impact of stock liquidity on the quality of corporate EID is determined by the information effect path and governance effect path of stock liquidity, and the role of the information effect path is more important. In summary, stock liquidity has had an important feedback effect on Chinese companies' active EID behavior through two pathways: Information effect and governance effect.</p>

Stages and Pedagogical Conditions for Forming Performance Phrasing Skills of Future Musical Art Teachers in the Process of Teaching Playing Wind Instruments

The article presents the justification of the step-by-step methodology of forming future musical art teachers’ culture of performing phrasing in the process of learning to play wind instruments. The problem of formation of the specified professional quality, which is considered as a segment of performance training that ensures the quality of the artistic-figurative disclosure of the meaning of a musical work, has been actualized. The essence and component structure of the culture of performing phrasing, which is made up of certain relevant performing skills, and the criteria for their assessment make it possible to classify three levels of their formation: high – “meaningful expressive phrasing”, medium – “aspiration for expressive phrasing”, low – “weak perception of phrasing”. Three stages are presented, according to which the introduction of pedagogical conditions is carried out, each of which aims to positively influence the components of the culture of performing phrasing. At the first stage – motivational-setting – the pedagogical condition of stimulating a meaningful attitude towards the skills of performing phrasing is introduced, which affects the component: “motivation of artistic-technical excellence”. At the second stage – practice-oriented – such pedagogical condition is introduced as the purposeful assimilation of various forms and types of phrasing in the context of the evolution of styles and genres, which affects the component: “competence in working on the performing repertoire and musical texts of pieces”. At the third stage – self-methodological – the pedagogical condition of the activation of methodological self-efficacy in performing and educational processes is introduced, which affects the component: “artistic-communicative content of creative-performing and pedagogical interpretation of musical works for wind instruments (solo, ensemble)”.

Research on the relationship between ESG disclosure quality and stock liquidity of Chinese listed companies

<abstract> <p>In this article, we aim to verify the relationship between ESG disclosure quality and stock liquidity of listed companies and to provide a detailed analysis of its mechanisms. Based on the theories of information asymmetry, signal transmission, reputation, and stakeholder, we summarize and analyze the theoretical and logical framework of how ESG information disclosure can impact stock liquidity. Following the fixed effect (considering individual, year, and industry), panel model was applied to empirically test the relationship between ESG disclosure score and stock liquidity with data ranging from 2012 to 2021. The research findings indicate that improving the quality of ESG disclosure by companies can significantly enhance the level of stock liquidity. Furthermore, we analyze and verify through mechanism tests that ESG disclosure can influence stock liquidity by increasing analyst attention and media coverage (information effect) and enhancing reputation (reputation effect). From a theoretical perspective, the paper enriches the research related to the economic impact of ESG information disclosure and factors affecting stock liquidity. Also, we validate theories connected to information and reputation. From a practical perspective, the research has specific reference value for policymakers, enterprise managers, and investors.</p> </abstract>