Disclosure Quality Research Articles

The bright side of analyst coverage: Evidence from stock price resilience during COVID-19

Understanding a firm's stock price resilience is crucial in an increasingly uncertain environment. We investigate the impact of financial analysts on a firm's stock price resilience. We find that firms in the Chinese stock market with higher analyst coverage were more resilient during the COVID-19 crisis and had lower pandemic-induced stock price declines, shorter decline and recovery periods, and higher recovery probability. This positive relationship is more prominent for firms with strong star analyst coverage and does not depend on ownership type or firm size. Moreover, analysts help firms attract attention from media and institutional investors, improve corporate governance by improving information disclosure quality (especially for private information), and reduce financial constraints, in turn, firms’ ability to absorb pandemic shocks improves. Overall, we demonstrate that financial analysts play a crucial role in shaping a firm's stock price resilience during crises, particularly for firms with strong star analyst coverage.

Global Evolution of Environmental and Social Disclosure in Annual Reports

ABSTRACTWe study environmental and social (E&S) disclosures in annual reports. Using the word embedding model to examine over 210,000 annual reports from 24,271 public firms in 30 international countries/regions between 2001 and 2020, we create an E&S dictionary that allows us to document trends in annual report E&S disclosure. Specifically, we find: (1) increases in length and boilerplate language and (2) decreases in specificity. Our results also suggest that E&S disclosure quality improves after the adoption of voluntary ESG reporting frameworks but deteriorates after disclosure mandates. Our findings provide systematic evidence on the evolution of E&S disclosure in annual reports over the past two decades and shed light on how voluntary and mandatory standards have shaped global E&S reporting practices.

The Influence of Sustainability Reporting in Enhancing Firm Value

There is a growing concern about sustainability reporting as stakeholders increasingly recognize the importance of sustainable and ethical business practices. Investors, consumers, and regulatory bodies are demanding greater transparency and accountability from firms regarding their sustainability and ethical corporate behavior. Accordingly, the objective of this paper is to examine the significant influence that sustainability reporting can exert on a firm's financial performance and overall worth. By employing three predominant theoretical frameworks: stakeholder theory, legitimacy theory, and signaling theory. The findings mostly show that sustainability reporting increases firm value. Reputational capital, investor confidence, and long-term financial performance improve for firms that report their sustainability performance. However, sustainability reporting affects business value through complicated mechanisms that include regulatory contexts, industry characteristics, and disclosure quality. Although positive associations were found, sustainability reporting's effects on firm value need further studies. Research should uncover the mediating variables and contextual elements that promote this association. Researchers can provide more detailed insights into how sustainability reporting might strategically boost firm value, improving corporate sustainability and financial performance. The findings of this study would provide an important contribution to firms and stakeholders. Firms that prioritize sustainability contribute to the well-being of communities and the environment. Further, with greater transparency, the public can hold companies accountable for their actions, and support firms that demonstrate genuine commitment to sustainability.

CSR disclosure quantity to CSR disclosure quality – in pursuit of a disclosure quality index

PurposeStudies in corporate social responsibility (CSR) disclosure were initially focused more on disclosure “Quantity” than “Quality” and while they have started to explore “Disclosure Quality”, their assessment mechanisms are found to be immature. Thus, while a number of papers have sought to assess the quality of CSR disclosure, this paper aims to suggest an approach tied closely to both expectations in assessing “quality” derived from the Conceptual Framework for Financial Reporting (revised 2018) and the global reporting initiative. The outcome is to offer a best practice approach to assessing CSR disclosure quality.Design/methodology/approachIn this paper, prior literature is reviewed, qualitative characteristics from the Conceptual Framework for Financial Reporting (revised 2018) and globally recognised guidelines such as the GRI are reviewed. The framework for a “CSR disclosure quality index” as an assessment tool to assess CSR disclosure quality is developed from qualitative characteristics and criteria identified.FindingsThe proposed CSR disclosure quality index is developed in stages from the qualitative characteristics identified in the Conceptual Framework for Financial Reporting (revised 2018) and criteria identified from the guidelines discussed. A table was then developed linking the qualitative characteristics to criteria providing a Likert scale approach to assessing the disclosures made by companies to make an assessment of the quality of the companies’ reports. It is argued this provides a robust assessment, being a direct and comprehensive measure of disclosure quality.Research limitations/implicationsAs with most qualitative work, there are alternative approaches to establishing an index, but the authors believe this is an approach offering links (and, therefore, credibility) to globally recognised guidelines in the assessment of CSR disclosure quality. Future work could enhance the alignment of this index with the sustainable development goals (SDGs), building on the preliminary connections established in this study.Practical implicationsAt a practical level this index offers an approach to reviewing the quality of CSR disclosures which could prove useful to policymakers and in the future development and expansion of this framework offering greater objectivity to assessments and justification for proposed improvement in reporting practice. Also, this index serves as a benchmarking tool for companies to meet the disclosure expectations of stakeholders.Social implicationsThis approach has the potential to substantially fulfil stakeholder expectations by addressing the growing demand for transparency in this area, while avoiding practices that could be perceived as superficial or misleading (greenwashing). Focusing on social issues enables stronger connections between companies and their stakeholders. Furthermore, the index helps companies link their CSR efforts with SDGs and show their commitment to long-term social value building in discussion of governance factors to show accountability expectations are being met.Originality/valueThis paper contributes to CSR disclosure quality literature and provides a reliable method of assessing the quality of CSR disclosures. Opportunities for further and broader developments can be envisaged while offering a credible and reliable approach.

A study on the impact of digital governance on disclosure quality of listed companies

Through empirical analyses, this paper confirms the beneficial influence of digital governance on the information disclosure quality of listed companies. Additionally, it uncovers the intermediary roles played by managerial transaction costs and human capital structure. Furthermore, the study investigates the varying impacts of corporate geographical location and property rights characteristics on the efficacy of digital governance. The findings indicate that digital governance noticeably enhances information disclosure quality, diminishes managerial transaction costs, and refines human capital structure. Moreover, listed companies in the eastern regions and those that are state-owned have experienced more substantial advancements in disclosure quality due to digital governance.

APPLICATION OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRINCIPLES INTEGRATED: THE CASE OF PT. SOLUSI BANGUN INDONESIA TBK. IN REACHING GOLD PROPER IN 2022

This research uses data. Secondary data from the 2018-2022 sustainability report was used with purposive sampling. Data analysis uses the content analysis method. Stakeholders determine materiality by focusing on customers, shareholders, employees, government, work partners, suppliers and mass media. Environmental aspects are considered the main material issue. Highest disclosure of carbon emissions in the Energy Consumption Category or EC sub-sector 2. Corporate governance supports community empowerment programs with an SROI of 8.70 (based on the author's calculations), which results in a Gold PROPER award. Overall, the assessment of materiality, quality of disclosure, governance company, and return on social investment at PT. Solusi Bangun Indonesia Tbk is considered good. Recommendations are provided so that companies can maintain and improve ESG implementation.

The Impact of Environmental, Social, and Governance Disclosure Quality on Stock Price Volatility in Heavily Polluted Industries - Based on Chinese Listed Companies

Facing natural disasters caused by the destruction of ecosystems, the world is paying increasing attention to the protection of ecosystems. Meanwhile, investors are particularly concerned about enterprises' environmental, social, and governance (ESG) performance, which is considered to be crucial to long-term development and value improvement. Currently, access to ESG information relies mainly on proactive disclosure by companies. Although China attaches great importance to corporate ESG disclosure, the quality of many companies' ESG disclosures remains poor, especially in heavily polluted industries. As China’s financial market matures, more and more investors may utilize stock price volatility to assess investment risk and then make investment decisions. Therefore, this paper aims to examine the impact of ESG disclosure quality on stock price volatility in heavily polluted industries. Taking listed companies in China's heavily polluted industries as the research object, this paper explores the impact of ESG disclosure quality on stock price volatility in heavily polluted industries by building a two-way fixed-effects regression model. This paper chooses Bloomberg Data Terminal's scores on ESG disclosure quality of companies and takes 2012 to 2020 as the research interval. Ultimately, this paper launches the study based on 693 data from 77 sample companies. After regression analysis and robustness test, the following conclusion is drawn: ESG disclosure quality and stock price volatility of heavily polluted companies show a positive correlation.

Impact of Registration System Reform on the Quality of Public Companies in China

As the reform of the registration system continues to advance, it's been a year since China fully implemented its Registration System Reforms. Whether the registration system reform has promoted the high-quality development of China's public companies has become a hot concern. This article systematically analyzes the impact of the registration system reform on the quality of public companies. It is divided into two parts: the impact on the quality of corporate governance and the quality of company operations. Additionally, it examines the impact of the registration system reform on the quality of information disclosure and accounting information. It also considers the positive and negative impacts on company finances and their ability to innovate. The article starts from the impact of the registration system reform on the quality of public companies, and targets the relevant recommendations of the registration system reform, to promote the high-quality development of the capital market and deepen the registration system reform.

The Impact of Analysts' Forecast Behavior on Companies

As an important information intermediary between public companies and investors, analysts are gaining an increasingly significant position in the capital market. They make use of their expertise and professional skills to interpret and analyze market information, and lead investors to make decisions by writing research reports. Hence, it is vitally essential for analysts to forecast relevant events or market participants’ behaviors correctly and accurately in the investment process of the market. Excessive deviation from the forecasts may damage the interests of investors and contribute to a bubble in the capital market. This paper focuses on the factors affecting analysts' forecast accuracy, such as analysts' valuation model selection preferences, systematic optimism bias, information disclosure quality, etc. By systematically combing the remarkable literature on analysts' forecasting behaviors and influences, this paper summarizes the impacts of both analysts' forecasting behaviors and the prediction accuracy on firms' share prices, investments and innovations, as well as puts forward suggestions for analysts themselves and for regulatory.

The Influence of Company Characteristics and Good Corporate Governance on the Quality of Sustainability Report Disclosure (In Banking Companies Listed on the IDX in 2020-2023)

The aim of this research is to investigate and evaluate the potential influence of company size, profitability, and audit committee on the level of transparency of sustainability reports in banking companies listed on the Indonesia Stock Exchange between 2020 and 2022. This research uses Sustainability Report as an independent variable and Company Size , Profitability, Institutional Ownership, and Audit Committee as dependent factors. The approach used in this research to determine the sample was purposive sampling, consisting of 38 samples of banking companies from financial reports and sustainability reports on the Indonesia Stock Exchange for three consecutive years from 2020–2022. The analysis method in this research uses statistical methods assisted by Eviews 12. The research results show that company size and institutional ownership have a significant effect on sustainability report disclosures, while profitability and audit committees are not significant on sustainability report disclosures.

Digital Transformation and Management Earnings Forecast

This paper conducts an empirical examination using listed companies on China's Shanghai and Shenzhen A-share markets from 2010 to 2020. The findings indicate that digital transformation has a significant positive effect on the quality of management's earnings forecast. Mechanism analysis reveals that this effect is more pronounced in companies with lower internal control indices, higher levels of corporate governance, and higher agency costs. Digital transformation enhances the quality of corporate information disclosure and mitigates information asymmetry, further improving management's earnings forecast level. Through heterogeneity analysis, further research finds that companies lacking a technical background among senior executives, those in less competitive industries, those with poor growth, and non-state-owned enterprises, experience a more significant positive impact on the quality of management earnings forecasts from digital transformation. The conclusions provide new evidence for continuing to advance digital transformation and elucidate the benign cycle mechanism between the capital market and the national economy. This study also proposes new perspectives for the regulation of predictive information disclosure by enterprises.

Does female board directorship affect the quality of KPI voluntary disclosure? Some evidence from French family firms

Purpose This paper aims to examine the impact of female board directorship on the quality of key performance indicators voluntary disclosure (hereafter QKPI). Further, this paper explores whether the presence of family board members mitigates the female directors’ effect on the QKPI. Design/methodology/approach This study explores closely held family firms listed on the CAC All-Tradable during 2015–2022. Findings The initial findings provide consistent evidence indicating a positive association between female board directorship and the QKPI. However, testing for the moderating effect of family board members on the linkage between female representation in the company’s boardroom and the QKPI reveals a negative relation. Originality/value This study focuses on gender equality in French-listed companies, a topic that has received little attention from researchers. The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. This study sheds light on issues concerning the 2016 law that requires quotas for women on boards of directors in French firms.

Information interactions on social media platforms and the quality of corporate social responsibility disclosure: Evidence from Chinese listed firms

Information interactions on social media platforms and the quality of corporate social responsibility disclosure: Evidence from Chinese listed firms

Analysing the Impact between Capital Structure and Accounting Disclosure Quality of Chinese Listed Companies

Analysing the Impact between Capital Structure and Accounting Disclosure Quality of Chinese Listed Companies

Exploring the missing link between top management teams' characteristics and environmental information disclosures of construction corporations

PurposeGiven the heavy pollution feature of the construction industry, construction corporations need to adopt an effective environmental governance strategy. The quality and quantity of environmental information disclosure (EID) implementation, as an essential part of a corporate environmental governance strategy, is impacted by the characteristics of the top management team (TMT). This paper aims to analyze the relationship between the demographic characteristics of the TMT (i.e. gender, age, tenure, educational level, and duality) and corporate EID.Design/methodology/approachUsing data from listed construction corporations generated between 2014 to 2018 in China, this study employs the Tobit regression model to test the research hypotheses. Also, this study applies a novel analytical approach, necessary condition analysis (NCA), to conduct a series of additional tests.FindingsThe results reveal that tenure and educational level are significantly and positively related to EID, while gender, age, and duality in the executive role are not significantly related to EID. When considering the TMT size as a moderator, the TMT age is positively related to the corporate EID, and the size of the TMT acts as a moderator to weaken the positive effect of the TMT age on the EID. The NCA results show that TMT gender, age, tenure, and educational level are necessary when the levels of EID exceed 40%.Originality/valueOur findings suggest that TMT characteristics have a relatively significant effect on corporate EID levels, which extends EID research to the construction industry. Corporate planners can endeavor to shape TMT characteristics to improve EID levels. The results of NCA provide insights into what TMT characteristics construction corporations need to satisfy in their pursuit of transparent EID, as well as the levels at which these characteristics are desired.

Chief Sustainability Officer (CSO) power and sustainability-based compensation for climate change disclosure and carbon performance: is it different for developed and developing nations?

Purpose Companies are increasingly appointing a Chief Sustainability Officer (CSO) to anchor the need to highlight climate change at the senior management level. This study aims to examine how CSO power and sustainability-based compensation influence climate reporting and carbon performance. Design/methodology/approach Using one of the largest data sets to date, consisting of 18,834 company years through the author’s observations, spanning an 11-year period (2011–2021) in 33 countries. This paper used quantitative methods – specifically, ordinal logistic regression estimation. This paper measures the level of climate change disclosure based on the carbon disclosure leadership methodology. Carbon performance is based on the intensity of carbon emissions (Scope 1, Scope 2), which is a quantitative and relatively more objective measure. Findings The results suggest that climate change disclosure continued to increase and the carbon emissions intensity of the companies in this study gradually decreased over the sample period. This paper finds that the presence of the CSO within the top management team has a positive and significant influence on the level of information on climate change of the companies in the sample. This finding confirms the idea that the managerial capacity of CSOs motivates the disclosure of climate change. The empirical results confirm that there are differences in the role that the CSO and sustainability-based compensation play in influencing the quality of climate information disclosure in developed and developing countries. Originality/value The recourse on a mixed theoretical framework, which highlights upper echelons theory, argues the understanding of the role of CSOs in explaining the relationship between climate change disclosure–carbon performance relationship. The novelty of the study lies in the approaches adopted to describe the quality of climate change disclosure. To control for endogeneity, this paper uses a difference-in-difference analysis by adding a firm to the Morgan Stanley Capital International index as an exogenous shock.

The audit committee’s IT expertise and its impact on the disclosure of cybersecurity risk

This paper examines the impact of the audit committee's IT expertise on corporate cybersecurity risk disclosure against the backdrop of increasing complexity and frequency of cyberattacks. We find that IT expertise of audit committees significantly improves the disclosure of cybersecurity risks. This effect is more pronounced in firms with less transparent financial reporting, firms with weaker governance, and firms with lower information asymmetry. Furthermore, the level of artificial intelligence adoption, the quality of internal controls, and the quality of information disclosure are potential influencing channels.

Executive legal background and quality of corporate accounting disclosure

Using China's A-share listed companies in Shanghai and Shenzhen from 2011 to 2022 as sample, we find that the legal background of executives has a positive effect on the quality of corporate accounting disclosure; the legal background of executives has a more significant effect on the quality of accounting disclosure in state-owned enterprises than in non-state-owned enterprises, and the quality of internal control plays a mediating role in the relationship between the legal background of executives and the quality of corporate accounting disclosure. Studying the impact of executives' legal backgrounds on the quality of corporate accounting information disclosure helps to gain a deeper understanding of how personal characteristics of executives affect corporate information disclosure behaviour. This not only expands the research field of the relationship between executive background characteristics and corporate behaviour, but also provides a new perspective and reference for executive recruitment and training in practice.

Can FinTech promote enterprise cross-region investment? ——Evidence from China

Cross-region investment by enterprises, through the integration of resources from different locations and the expansion of market spaces, has become a crucial engine for promoting high-quality regional economic development. However, the geographical restrictions of traditional financial services significantly hinder enterprise expansion across regions. The emergence of financial technology offers fresh perspectives for addressing this challenge. This paper investigates whether financial technology can stimulate cross-region investment behaviors among enterprises using data from Chinese A-share listed companies from 2009 to 2020. The findings reveal that financial technology significantly facilitates cross-region investment by enhancing the quality of information disclosure, alleviating financing constraints, and advancing digital transformation in enterprises. These conclusions have been validated through a series of robustness tests. However, the impact of financial technology exhibits heterogeneity based on factors such as the ownership structure of the enterprise, industry type, and the degree of capital market openness. Further research indicates that while financial technology-promoted domestic cross-region investments enhance returns on investment, this is not the case with foreign cross-region investments. Our findings unveil new mechanisms through which financial technology promotes cross-region investments in enterprises, offering novel perspectives and strategic recommendations for emerging market countries to fully exploit the potential of financial technology and solve the challenges of cross-region investment. It has significant theoretical value and practical implications for optimizing resource allocation efficiency and promoting balanced and coordinated regional economic development.

Voluntary forward-looking disclosures and default risk pricing

This study examines the effects of textual and numerical information contained in voluntary forward-looking management forecast reports (MFRs) on the pricing of default risk. We find that abnormal changes in credit default swap (CDS) premiums around MFR issuance dates are inversely associated with textual quality and the extent of positive textual news conveyed in the MFR. Furthermore, we find that the negative association of CDS premiums with either textual or numerical news is qualified by the MFR’s textual quality. Collectively, our evidence implies that CDS counterparties use textual quality to verify the quality of the information disclosed in both textual and numerical modes before impounding it into the default risk price. These findings suggest that multimodal verification can enhance the overall information quality of incentive-driven disclosures.