Specific Disclosure Research Articles

Impact of board characteristics on governance, environmental and ethical disclosure

PurposeThe purpose of this study is to investigate how board characteristics impact the governance, environmental and ethics disclosure. Board characteristics such as board size, gender diversity, board independence, CEO/chair duality and board meeting are included.Design/methodology/approachThis study is based on a sample of 82 companies listed in the SBF120 between 2012 and 2017. A number of econometric techniques are used such as generalized least squares to test the panel regressions.FindingsBoard independence, board gender diversity and board meetings have a positive and significant influence on governance, environmental and ethics disclosure. Board size is positively and significantly associated only with corporate environmental disclosure. The adoption of Global Reporting Initiatives (GRI, G4) has not affected or biased the corporate governance (CG), environmental and ethics disclosure.Originality/valueThis study adds to the literature on management reporting behavior and ethics and contributes to the extant CG literature by offering new evidence on the disclosure of good CG practices as well as environmental and ethics behavior. This study offers new insights about the potential influence of board characteristics on such specific disclosure practices focusing “during the optional period of GRI4 and after their mandatory adoption”.

Consumers Beware: Online Personalized Pricing in Action! How the Framing of a Mandated Discriminatory Pricing Disclosure Influences Intention to Purchase

Online businesses collect a wealth of data on customers, often without properly informing them. Increasingly, these data can be used for behavioral price discrimination. In this two-study article, we explore how consumers would respond if businesses were compelled to disclose their use of discriminatory behavioral pricing techniques. Using different disclosure frames, we examine the effects of disclosure on purchase intention and purchase probability. The findings indicate that specific disclosure frames affect purchase intentions. Furthermore, we find that a disclosure frame that is more in line with a consumer’s self-interest increases purchase intention. Specifically, the frame indirectly influences intention to purchase through its effect on the perception that the use of behavioral pricing information serves self-interest. In this way, our study draws attention to a potentially unanticipated effect of regulatory intervention. Implications for future research and legal policy are discussed, focused on the need to design and empirically test the effectiveness of disclosures online.

Materiality analysis in sustainability and integrated reports

Purpose This paper aims to assess the disclosure on materiality analysis in sustainability and integrated reports through the lenses of legitimacy and stakeholder theory. The following three research questions are addressed: to what extent do companies report on their materiality analysis, what are the methods used for the analysis of the stakeholders and their topics/aspects and is there a higher disclosure of information of materiality assessment because of G4. Design/methodology/approach The paper uses an archival research approach and deploys content analysis. Thus, a binary disclosure index was developed that indicates whether materiality related information are mentioned and explained in detail. The sample contains 132 reports from 33 companies of the German 110 HDAX stock market index between 2014 and 2017. Findings The paper reveals that materiality analysis is a growing phenomenon. Nevertheless, companies disclose only a small amount of related information and fail to explain the methods for the stakeholder and topics/aspects identification. Thus, the underlying processes to define the report content remains unclear. Through the lenses of legitimacy theory, the study indicates that materiality analysis can strategically be misused to define report content without considering the interests of legitimized stakeholder groups and thus, does not improve the reports to those groups. Practical implications Managers are urged to regard the importance of reporting about ongoing materiality assessments, as otherwise, concerns about the overall reliability of the information presented may arise. Social implications Poor reporting about materiality assessments might lead to potential conflicts with stakeholders that do see their important topics not sufficiently reflected in the sustainability or integrated report. Originality/value This study contributes to the literature regarding materiality in sustainability and integrated reporting and uses the assumptions of disclosure theories to evaluate the disclosure of a specific disclosure item.

The intangible index in bank management

Purpose: Our research objective is to perform a descriptive analysis of the information on intangible assets disclosed by Spanish banks indexed on the IBEX 35 as a step prior to the creation of which allows us to eventually create a specific disclosure index for this type of content during 2010-2012, the most critical years of the crisis in Spain.Design/methodology/approach: In a first section of the methodology, it has been carried out a content analysis using five categories that cover all the terms that were considered the most relevant in the literature on intangible assets: concepts of intellectual capital, human capital, structural capital, relational capital and usefulness of information. This information has been the basis for the design of an index by categories and global as a second part of the methodological design.Findings: Our results found that the disclosure level of Spanish financial entities in terms of intangibles is reduced with an aggregate index of intangible assets of 0.2698 (between 0 and 1). Although, within the categories proposed it can be highlighted the priority role of the usefulness information index followed by the relational and human capital indexes.Research limitations/implications: The study focuses on 2010 to 2012, which conditions and justifies the results obtained for a period of crisis such as the one analyzed.Practical implications: Our results confirm that the financial entities have not bet for the use of the disclosure of information on intangibles during the crisis despite their potential value in order to guarantee a competitive business performance.Social implications: Managers of financial institutions may have a comparative vision of the disclosure of intangibles and adopt future disclosure policies that consider the value of this information.Originality/value: As the main contribution, this paper incorporates the results of a specific index on intangibles (both globally and specifically for 5 categories) for financial institutions. Our results open future lines of research that analyze why not use this information for competitive purposes and, specifically, to gain confidence in a context as difficult as that experienced in the years of crisis studied.

Informativeness Assessment of Risk and Risk-Management Disclosure in Corporate Reporting: An Empirical Analysis of Italian Large Listed Firms

Purpose Risk-related information is prevalently used in the decision-making process by various counterparties. Therefore, this study investigates how compa-nies conduct their risk-disclosure practice after the new Italian Legislative Decree No. 254 of December 30, 2016. In particular, we draw attention to three aspects: (1) the interaction relationship among risk or risk management (RRM), industry, type of risk, and level of specific disclosure; (2) the variation of specific level of disclosing risk-related information across the industries and types of risk; and (3) the different behavior between risk and risk-management disclosure in the after-math of the regulation's issuance. Design/methodology/approach The study is based on a sample of large un-dertakings and groups that are subject to the Legislative Decree. Two phases of content analysis were executed to analyze the risk and risk-management disclosure. The research questions were investigated with the row effects loglinear model. Findings Our result shows that there are interaction relationships among RRM, type of risk, industry, and level of specific disclosure. Companies provide risk-related information at different levels of specificity depending on whether the information is risk description or risk management, the firms are operating in manu-facturing or nonmanufacturing, and the type of risk that the firms disclosed in their reports. Practical implications The paper provides evidence of inconsistent company behavior in disclosing company-specific information in favor of internal and ex-ternal stakeholders, particularly by balancing company-specific disclosure be-tween risk descriptions and risk-management policies. Policymakers might also consider this current phenomenon to decide to what extent disclosure requirements should be detailed and, instead, what room should be left for management discre-tion with respect to users' needs. Originality/value This paper is an up-to-date assessment of Italian firms' compliance with Legislative Decree No. 254 of December 30, 2016.

Disengaged Owners and Financial Reporting: Evidence From Index Funds

Index funds are an increasingly important part of the U.S. stock market with the average S&P 1500 firm having 22% of their equity held by index funds in 2018. Building on concurrent research finding that index fund managers engage less with portfolio firms than other investors, we expect firm-level index fund ownership to be associated with systematically different financial reporting decisions by firms. Using fund-level stock holdings, we find that greater index fund ownership is associated with less bias (greater frequency of missing earnings and fewer abnormal accruals) and less obfuscation (more readable, more negative, and more specific disclosures) in financial reporting. Additional analysis finds results consistent with this effect being due to lower engagement and not higher oversight. Further, we document that fund-level holdings are operationally different that institution-level holdings and that the use of institution-level classifications leads to different empirical implications.

The moderating effect of firm size on relational capital and firm performance

PurposeThe purpose of this paper is to contribute to the ongoing debate regarding the relationship between relational capital (RC) and firm performance, by investigating the moderation effect of firm size and its key role in defining conditions for competitive advantage.Design/methodology/approachThe paper uses the interpretative lens of the resource dependence theory, and refreshes consolidated studies rooted in RC. It identifies a set of variables to measure the influence of RC on firm performance, including the cost of goods sold, interest expenses and earnings per share. Content analysis was used to capture specific features of corporate disclosure tools using 51 items pertinent to RC. The authors used a specific disclosure index drawing on data collected from 73 listed firms in France, Germany, Italy and the UK. Data covering the period from 2011 to 2013 were analyzed using six regression models.FindingsFirm size has a moderating effect on the relationship between RC and some variables linked to firm performance.Originality/valueThe study combines an internal and external perspective to investigate the interplay between firms and market environments, and therefore, enriches the ongoing debate concerning the relationship between RC and firm performance. It outlines possible ways through which RC can become an effective source of competitive advantage.

A Comparative Evaluation of the IFRS/IAS and the EU Accounting Directive: Differences, Similarities and Conflicts

With confidence in the regulation of the market severely shaken, the European Commission has had to adopt a comprehensive package of measures to bring about economic recovery and sustainable growth. One method included in the package has been the simplification of financial reporting requirements of firms. Published with the aim of harmonizing legal reporting, facilitating cross-border investment, improving financial comparability and increasing public confidence in financial/management reports by use of enhanced/consistent specific disclosures, the Accounting Directive differentiates from IFRS/IAS. With this in mind, this paper will attempt to identify differences, similarities and conflicts under both sets of standards. Keywords: EU Accounting Directive, IFRS/IAS, Comparative Analysis, Harmonization JEL codes: M41(Accounting), M48 (Government Policy and Regulation)

ICO vs IPO: Empirical Findings, Information Asymmetry and the Appropriate Regulatory Framework

Initial coin offerings (ICOs) are a new form of fundraising whereby blockchain-related ventures raise public capital in exchange for newly issued digital tokens. In recent years, ICOs have been a prominent focus of legal and economic studies, which analyze their characteristics and determinants of their success. In this paper, we systematically review these studies and identify key ICO success factors. We then offer theoretical explanations for our findings, and in certain cases, connect the empirical results with the IPO and crowdfunding literatures. The results of our analysis are important for two reasons. First, because there is no single formal data source, and there is evidence of inconsistencies across the different data sources available. Second, our results show in what circumstances ICO investors and initiators behave like IPO investors and initiators, and hence contribute to the literature on tokens as securities. In the second part of our paper, based on our analysis, we show that a high degree of information asymmetry exists in ICOs, identify three sources of informational asymmetries, and discuss the role of signaling theory and rating websites in mitigating these asymmetries. Finally, we discuss the regulatory implications of our findings, and propose specific disclosure requirements tailored to ICOs.

SEC Comment Letters on Form S-4 and M&A Accounting Quality

Prior research on SEC comment letters has almost exclusively focused on reviews of periodic filings, such as 10-Ks. Transactional filing reviews, such as those related to mergers and acquisitions (M&A), are a fundamental priority of the SEC and to which it dedicates significant resources. We help fill the void in the literature by examining the influence of SEC comment letters on one type of transactional filing, Form S-4, on the accounting quality of the newly merged entity. We find that S-4s that receive an SEC comment letter are less likely to have a restatement or a goodwill impairment after the M&A deal is completed. Our inferences remain the same using either an entropy-balanced sample or a propensity-score-matched sample based on firm and deal characteristics. These results are stronger for S-4 comment letters with higher intensity and M&A- specific comments. Finally, to explore plausible mechanisms and provide further context, we examine specific disclosure changes in S-4 amendments filed during the filing review process and find evidence that the improved M&A accounting quality is related to revisions to the pro forma financial statements and the total purchase price. Overall, our findings provide evidence on the effectiveness of the SEC’s comment letter process related to M&A deals.

Environmental Performance and Voluntary Disclosure on Specific Environmental Activities: An Empirical Study of Carbon vs. Non-Carbon Intensive Industries Legitimacy Proactive Approach

Adopting legitimacy proactive approach, this paper examines and evaluates relationship between levels of environmental performance (measured by environmental awards) and the quality of specific voluntary environmental disclosure using a sample of UK FTSE 100 companies. Companies in the sample have been grouped according to industry membership (carbon intensive vs. non-carbon-intensive) and environmental performance (poor performers vs. better performers). Statistical techniques have been used to test for variations in the quality of voluntary environmental disclosure between the companies in these groups. The findings reveal that the extent of quantitative environmental disclosure by companies with poor environmental performance in the carbon intensive group was significantly higher than similar disclosures made by either better environmental performers or poor environmental performers from non-carbon intensive industries for some activities. In contrast, quantitative environmental disclosure by better performers is found to be of a significantly higher quality than similar disclosures made by either poor performers or better performers from carbon intensive group for other activities. The results have some implications for various stakeholders and offers opportunities for future research, specially, in relation to environmental awarding bodies and their criteria for awarding.

Firm- Specific Characteristics and Voluntary Disclosure Reporting: An Empirical Research on Listed Companies of Bangladesh

Firm- Specific Characteristics and Voluntary Disclosure Reporting: An Empirical Research on Listed Companies of Bangladesh

Criminal Acts of the Nazi Germany Occupation Regime in the Territory of the Vyazma District of the Smolensk Region in 1941-1943

When numerous myths are circulating around the Great Patriotic War on the whole and around the Vyazma Pocket in particular, there is the necessity to study the specific disclosures concerning the tragic period of the occupation of the Smolensk Region by Nazi Germany that can be proved with documents. This determines the topicality of this paper. In our research, we rely on the documents kept in the Central Archives of the Russian Defense Ministry, the Governmental Archives of the Smolensk Region, as well as on the witness memoires. The purpose of this research is to study the Nazi Germany war crimes committed by the occupation regime in the territory of the Vyazma District of the Smolensk Region in 1941-1943. The results of the research demonstrate that in 1941-1943 in the territory of the nowadays Vyazma District of the Smolensk Region, Nazis and their accessories committed the full range of war crimes as defined in the four Geneva Conventions (1949): murder of all kinds, mutilation, cruel treatment and torture; humiliating and degrading treatment; public arbitrary executions; cruel and degrading treatment of prisoners of war, including the wounded and sick. For civilian persons, the whole system of horrification and oppression was created to break down their resistance; the punitive actions were taken regularly. Special cruelty and cynicism were inherent to numerous cases of burning villages together with their residents, who in the war time were mainly the old, women, and children.

Pediatric HIV Disclosure in Northern India: Evaluation of Its Prevalence, Perceptions amongst Caregivers, and Its Impact on CLHIV.

Background With improving standards of care of children living with HIV (CLHIV), pediatric HIV related mortality rates are declining. New challenges like HIV status disclosure are emerging which need to be addressed to ensure their smooth transition into adulthood. Poor disease disclosure rates are observed in CLHIV globally. Aims This study was done to assess the prevalence of HIV disclosure in North Indian CLHIV, know the perceptions of caregivers regarding disclosure, and evaluate the impact of disclosure on CLHIV. Methods It was a questionnaire based cross-sectional study carried out amongst 144 caregivers of CLHIV aged 6-16 years attending the pediatric HIV clinic of a tertiary care teaching hospital. Results Though the majority (93.8%) caregivers felt that it is important to disclose but only 33% of the children were actually disclosed. Eighty five percent felt that disclosure must be done by one of the family members and correspondingly 73% of the disclosed children were actually disclosed by their parents. Forty seven percent believed that the most appropriate age for disclosure is 10-12 years. The mean age at which disclosure was actually done was 11.06 ± 1.62 years. Comparison of the disclosed and undisclosed CLHIV revealed that the disclosed group had significantly higher age, longer duration of taking ART, and higher proportion of paternal orphans. Age of the CLHIV was the only significant factor for disclosure. Several reasons were cited by the caregivers for nondisclosure. The caregivers observed improved drug adherence in 47.9% of the children following disclosure. Conclusions There is a need to develop region specific pediatric HIV disclosure guidelines keeping in mind the caregivers' perceptions. The guidelines must be age appropriate, systematic, and socioculturally acceptable. The most suitable age for disclosure appears to be 10-12 years. Involvement of caregivers and health care providers in the process is a must.

The relationship between corporate forward-looking disclosure and stock return volatility

The study assesses corporate forward-looking disclosure by measuring four attributes, namely disclosure quantity, disclosure coverage, disclosure concentration and disclosure quality, through a sample of 34 listed firms in the Bahrain Bourse from 2014 to 2017. The study also investigates the relationship between these attributes and stock return volatility. Regression analysis has been employed with five different models to examine the relationship between the four attributes of corporate forward-looking disclosure and stock return volatility. The main finding of this study agrees with the results of Bravo et al. (2009) who found that the selection of a specific disclosure index could influence crucially the results of the analysis. In addition, stock return volatility has a statistically significant negative association with the three attributes of forward-looking disclosure, namely disclosure quantity, disclosure coverage and disclosure quality. In contrast, it has a non-significant association with the fourth attribute of forward-looking disclosure, disclosure concentration. This study provides a novel contribution to disclosure quality studies by being the first study to examine forward-looking disclosure quality attributes in the Kingdom of Bahrain.

Promoting young children’s interpersonal safety knowledge, intentions, confidence, and protective behavior skills: Outcomes of a randomized controlled trial

Promoting young children’s interpersonal safety knowledge, intentions confidence and skills is the goal of many child maltreatment prevention programs; however, evaluation of their effectiveness has been limited. In this study, a randomized controlled trial was conducted examining the effectiveness of the Australian protective behaviors program, Learn to be safe with Emmy and friends™ compared to a waitlist condition. In total, 611 Australian children in Grade 1 (5–7 years; 50% male) participated, with assessments at Pre-intervention, Post-intervention and a 6-month follow-up. This study also included a novel assessment of interpersonal safety skills through the Observed Protective Behaviors Test (OPBT). Analyses showed participating in Learn to be safe with Emmy and friends™ was effective post-program in improving interpersonal safety knowledge (child and parent-rated) and parent-rated interpersonal safety skills. These benefits were retained at the 6-month follow-up, with participating children also reporting increased disclosure confidence. However, Learn to be safe with Emmy and friends™ participation did not significantly impact children’s disclosure intentions, safety identification skills, or interpersonal safety skills as measured by the OPBT. Future research may seek to evaluate the effect of further parent and teacher integration into training methods and increased use of behavioral rehearsal and modelling to more effectively target specific disclosure intentions and skills.

Attitudes Toward Parental Disclosures to Children and Adolescents by Divorced and Married Parents

ObjectiveTo examine individuals' attitudes about parental disclosures to children.BackgroundParents' disclosures can either help or hinder children's coping with family‐related stressors. Knowing what is appropriate to disclose, however, is not always clear.MethodWe examined judgments about parental disclosures using a mixed‐methods approach. In 18 factorial vignettes, information about a parent's marital status and gender and a child's age and gender were randomly varied; a convenience sample of 561 individuals evaluated the appropriateness of parental disclosures. An open‐ended question asked respondents to explain their answers.ResultsQuantitative data indicated that children's ages and parents' gender affected attitudes about disclosures, but parents' marital status and children's gender did not. Qualitative responses indicated that participants were concerned about parental disclosures putting children in the middle of parents' problems. Disclosures about sexual issues were considered inappropriate for school‐aged children but appropriate for adolescents.ConclusionThere is consensus on evaluations of the appropriateness of specific parental disclosures. Negative disclosures are perceived as potentially harmful to offspring regardless of parents' marital status. Some topics are seen as more acceptable to disclose to adolescents than to younger children, and evaluations of specific disclosures differ for fathers and mothers.ImplicationsA better understanding of how people evaluate parental disclosures may be useful to family therapists, parent educators, and others who work with families.

Selling structured products to retail investors in the US

PurposeTo explain the inherent risks, draw attention to SEC and FINRA guidance, and suggest ways to limit and control the sale of structured securities to retail investors.Design/methodology/approachExplains potential problems with the sale of structured securities to retail investors; recommends marketing, disclosure, training, suitability, and supervision guidelines; summarizes the results of an SEC sweep examination; draws conclusions.FindingsBoth the SEC and FINRA have stopped short of saying that retail sales of structured products is unsuitable per se, but both have demonstrated unease about this activity and clearly indicated that firms who engage in it have heightened and specific disclosure, training, suitability and supervisory obligations.Practical implicationsAlthough firms certainly can sell these products in the retail market in a responsible and compliant manner, they should do so with thought, preparation and caution, because the regulatory agencies are watching.Originality/valuePractical guidance from experienced financial services and securities lawyer concentrating on investment advisers and broker-dealers.

Righting the Course: What the DOJ Should Do About the IEEE Business Review Letter

Standard-development organizations (SDOs) “vary widely in size, formality, organization and scope,” and therefore individual SDOs may need to adopt different approaches to meet the specific needs of their members. Critically, to balance the needs of both contributors and implementers, SDO policies must be developed through transparent and consensus-based processes. Issuance of best practices by a government agency may unduly influence private SDOs and their members to adopt policies that might not otherwise gain consensus support within a particular SDO and that may not best meet the needs of that SDO, its members, and the public. Accordingly, the U.S. antitrust agencies have taken the position that they do “not advocate that [SDOs] adopt any specific disclosure or licensing policy, and the [a]gencies do not suggest that any specific disclosure or licensing policy is required.”

Initial trends in corporate disclosures following the introduction of integrated reporting practice in South Africa

PurposeThe purpose of this paper is to explore the implications of IR reforms in South Africa on corporate disclosure practices of South African companies. In particular, the authors explore initial trends in corporate disclosures following the adoption of IR practice.Design/methodology/approachDrawing from Suchman’s (1995) framework of strategic and institutional legitimacy, the authors use content analysis to examine corporate disclosure practices. The authors conduct industry-specific analyses based on various industries to explore corporate disclosures practices across and within various industries in South Africa. The evidence is drawn from 246 integrated reports of large South African companies across six major industries over a three-year period (2011-2013), a period following the introduction of an “apply or explain” IR requirement in South Africa.FindingsThe results first show a significant increase in the overall amount of corporate disclosures following the adoption of IR practice. In particular, the authors find that intellectual capital and human capital disclosure categories have increased over time, with relational capital disclosures showing a decreasing trend. Second, the authors find that corporate disclosures are increasingly becoming institutionalised over time across and within industries following the adoption of IR practice. However, companies fail to provide meaningful disclosures on the interdependencies and trade-offs between the capitals, or components of a capital following the adoption of IR practice. Overall, the authors find that companies use specific disclosure strategies to respond to external pressures (strategic legitimacy), and that such disclosure strategies are increasingly becoming institutionalised across and within various industries (institutional legitimacy).Practical implicationsThe theoretical implication of this study is that the strategic and institutional perspectives of legitimacy theory are complementary, rather than conflicting, and dovetail to explain corporate reporting practices. In terms of practical implications, the adoption of specific reporting frameworks such as the emerging IR framework is a double-edged sword. On the one hand, such reporting frameworks could potentially enhance comparability and consistency of organisational reports across and within industries. On the other hand, corporate reports could become a set of monotonous reports motivated by considerations other organisational accountability. Hence, to overcome the latter, this study emphasises the importance of specific accountability metrics and reporting guidelines, rather than the current generic IR guidelines, to enhance organisational reporting practices.Originality/valueThe paper’s longitudinal analysis of a large sample of integrated reports following the adoption of IR practice has the potential to inform growing academic research and ongoing policy initiatives for the emerging IR agenda.