Disclosure Transparency Research Articles

Information-driven stock return comovements across countries

This article analyses stock market comovements at a global level for 37 advanced and emerging countries in the last two decades. The article reports that international stock return comovements were greater in advanced countries than in emerging ones, but increased more rapidly in emerging countries than in advanced ones. The driving forces behind these comovements were country-specific fixed effects and time-varying factors over the period 2007–2015. These factors include not only the openness of international trade and finance but also institutional factors representing the development of information and communication technologies, the protection of property rights, and the transparency of information disclosure. These institutional factors worked in line with an information-driven comovement theory.

Evaluating the transparency of pharmaceutical company disclosure of payments to patient organisations in the UK

Patient organisations contribute to many areas of pharmaceutical policy. In developing their organisational capacity, many turn to financial support from pharmaceutical companies, which may create conflicts of interests. However, the transparency of the industry’s self-regulatory approach to the disclosure of payments to patient organisations has evaded scrutiny. Using company reports disclosing payments to UK patient organisations in 2012–2016, we evaluate the transparency of reporting using indicators derived from industry’s European patient organisation Code. We found a large proportion of companies did not have any disclosure reports available despite many having made payments, confirmed by comparing with annual financial accounts of patient organisations registered as charities. Where disclosure reports were available, many payments were not adequately described, resulting in large portions of money being disclosed without clarity as to the payment type and purpose. We found companies were clearer regarding whether payments were financial or benefits-in-kind, but transparency was particularly inadequate as to whether it could be determined if payments were indirect or direct and restricted or unrestricted, and almost no companies mentioned the VAT status of payments. Our findings suggest that the industry’s self-regulatory approach to transparency has not been working efficiently. We suggest ways for standardising and increasing the precision of information by pharmaceutical companies and advocate for the introduction of a centralised, and easily accessible national-level payment database.

Transparansi Pengungkapan Penyisihan Terhadap Manajemen Laba Akrual

This study aims to examine the effect of transparency in disclosure of allowance for accrual earnings management. This research is classified as causal associative research. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange in 2013-2017. By using the purposive sampling method, there are 30 companies as research samples. Overall accrual earnings management uses discretionary accruals, transparency is measured by the allowance disclosure indicator. The type of data used is secondary data obtained from www.idx.co.id. The analytical method used is panel cross section regression analysis. The results of this study indicate that transparency in disclosure of allowance is not able to explain the variance of accrual earnings management in the observation company so that the research hypothesis is rejected.

Appealing to the Wrong Stakeholder? The Uneven Returns of Transparency in Voluntary Disclosure

Appealing to the Wrong Stakeholder? The Uneven Returns of Transparency in Voluntary Disclosure

Reproducibility and Transparency by Design

The reproducibility of bioinformatics analyses can be elevated to equal status with biological discovery. To achieve this, reproducibility must become part of the process, not an afterthought. Graphical Abstract Highlights • Repositories are enabling sharing of data. • Sharing analyses remains a major stumbling block for reproducibility. • Three simple steps can enable sharing analyses, with nominal effort.

The adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework: lessons from South Africa

PurposeThis study aims to explore factors influencing voluntary adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework. Given South Africa’s political history, the authors argue that accounting practice can be used to secure the legitimacy and transparency of businesses.Design/methodology/approachTwo logistic regression equations are used to predict the likelihood of firms’ subscribing to either Global Reporting Initiative (GRI) or the Integrated Reporting (<IR>) framework, respectively. The authors consider annual, sustainability and integrated reports issued for the financial year ended 2014.FindingsThe results show a statistically and significant positive association between the adoption of the GRI’s guidelines and the level of transparency of non-financial disclosures and environmental sensitiveness. The application of the <IR> framework is also associated with the level of a firm’s transparency score and with its respective analyst following, which acts as a measure for capital markets requiring a high information environment.Originality/valueThis paper illustrates the development of integrated and sustainability reporting (SR) practices within an emerging market. By drawing distinctions between locally developed South African codes of corporate governance, namely, King I-III and international guidelines proxied by the GRI’s guidelines for SR, and the <IR> framework, the authors show that South African firms still adopt international guidelines despite the mandatory framework in place.

Monitoring effect of transparency: How does government environmental disclosure facilitate corporate environmentalism?

AbstractEnvironmental information transparency is a key policy instrument in environmental governance, which has been emphasized in most of the literature. Although a large body of research has focused on its role at the national or industrial level in the developed countries, few studies have extended it to emerging economies and tested its role in the subnational context. In this paper, we have empirically examined how government environmental disclosure shapes corporate environmentalism in the context of China. It is argued that the information transparency of government environmental disclosure can promote corporate environmentalism by providing supports for governments' decision‐making of environmental governance, the activeness of environmental nongovernment organizations, and the participation of general public in environmental issues. Especially, we have highlighted two kinds of influences on focal relationship: booster role of bureaucratic capability in the diffusion of environmental institutional pressure and receiver role of organization slack and industrial competition in the perception of environmental institutional pressure. Using a panel dataset of Chinese publicly listed firms from 2008 to 2015, a positive relationship between government's environmental information transparency and corporate environmentalism is found. In addition, our result has shown that this relationship will be stronger for regions where government bureaucracy capabilities are stronger. This study contributes to understanding of the process of firms' strategic choice facing environmental and institutional changes in emerging economies.

Corporate Governance, Risk Management and Ethical Investment: Evidence From Banking Industries

Considering the importance of good corporate governance in the banking industry, the study has been designed to investigate the managerial perceptions on interrelationship among good corporate governance, risk management, and ethical investment of the commercial banks of Bangladesh. Bangladesh has been selected as a field of study for three reasons. Firstly, banking is the leading sector in Bangladesh. Secondly, banking sector has been highly criticized in the recent times due to Bangladesh Bank scandal. Thirdly, banking is gradually being challenging services in Bangladesh. As a financial intermediary, bank has to ensure good corporate governance for smooth operations and reducing agency problem. As a trustee, bank deals with the money of others through various schemes of investment. Ethical investment known as social responsible investment is an indicator of good corporate governance. A structured questionnaire has been used to gather perceptions of managers of the sample banks. The results suggest that the most important factors for effective CG were the board of directors, auditors and managers of the various departments. The study also finds that risk taking behavior of the bank is influenced by the direction of board of directors. In this study corporate governance variables have been categorized with some sub-indices. Board’s structure with independent directors and well communication with supervisors ensure the efficient risk management practices in the banks where internal audit system and transparent disclosures of the board ensure the ethical investment practices.

Efficiency, firm-specific and corporate governance factors of the Takaful insurance

PurposeMalaysia is recognised as an emerging country with a large Muslim population, making the Malaysian Takaful industry the largest Takaful market in the Southeast Asia region and, notably, one of the fastest growing markets globally. Malaysia is also the first country globally to implement a risk-based capital framework for Takaful. Therefore, the purpose of this paper is to identify the factors that influence the efficiency level (cost efficiency and technical efficiency) of the Takaful industry and to examine the effects of Takaful insurance firms’ specific factors and corporate governance factors that influence the efficiency of Takaful insurance in Malaysia.Design/methodology/approachIn this paper, the efficiency level of the Malaysian Takaful industry was examined between 2011 and 2015. The sample consisted of 11 family Takaful and 8 general Takaful operators. Two-stage Data Envelopment Analysis (DEA) was used by first, conducting non-parametric frontier data envelopment analysis to obtain a DEA score for each operator. This was followed by panel regression with the DEA scores as the dependent variable and the insurance firms’ specific factors and corporate governance factors as the independent variables.FindingsThe results of DEA indicate that Takaful operators in general have allocative inefficiency but family Takaful is more cost efficient than general Takaful. Results of panel data analysis reveal that corporate governance factors do influence the cost efficiency but find no evidence on the firm-specific factors towards the cost efficiency and technical efficiency on Takaful operators. Board size and the proportion of non-executive directors impose a negative and significant relationship with cost efficiency, while proportion of Muslim directors in the board is not significant.Research limitations/implicationsThis paper focused solely on Malaysia which uses strict regulations governing the Takaful insurance market. Due diligence was also performed to minimise any limitation in the paper. It is proposed that future studies should examine this issue in greater detail by incorporating more data from other Muslim countries.Practical implicationsThe findings of this paper have significant implications for policymakers to understand the efficiency condition in the Takaful market. Takaful operators should maintain a small board size with a higher proportion of executive directors, given they could improve the level of effective decision-making to enhance the cost efficiency. As corporate governance factors are significant, Takaful operators in Malaysia should also undertake transparent disclosure practice and reporting such as providing adequate and relevant information related to Shariah compliance and principles to provide a robust foundation as the Takaful market leader regarding Takaful regulations globally.Social implicationsThe consumer is able to make a better decision when choosing Takaful insurance company to protect their interests.Originality/valueNo similar paper has been undertaken to the best of the researcher’s knowledge using similar research design and scope to investigate the efficiency of Takaful insurance as in this paper. Takaful insurance is a rapidly growing industry in Malaysia, setting a prime example to other countries globally. Malaysia was selected for this study, as it is the only nation that has implemented the most extreme regulation in the Takaful insurance market.

The Effects of Materiality and Disclosure Transparency on Nonprofessional Investors’ Reactions to CSR Restatements: An Experimental Investigation

Investors are demanding more Corporate Social Responsibility (CSR) reporting, which has increased the prevalence of CSR disclosures. However, such disclosures are restated at high rates, leading to concerns about reliability. Using two experiments, we investigate how investors react to restatements of CSR disclosures. Results reveal that a negative CSR restatement is decision useful, whereby investors are less willing to invest in a company that corrects a significant overstatement of performance. We also find that features of the environment—the materiality of the CSR issue and the intentionality of the error—affect investors’ reactions to the restatement. Finally, our study demonstrates how CSR restatements affect investment judgments. Specifically, we provide evidence of a “contagion effect,” by which the credibility effects of a CSR restatement transfer to investors’ assessments of financial disclosures. These results inform regulators and practitioners concerned about the ramifications of errors in CSR reporting on nonprofessional investors’ judgments.

Political Corruption and Firm Value in the U.S.: Do Rents and Monitoring Matter?

Political corruption imposes substantial costs on shareholders in the U.S. Yet, we understand little about the basic factors that exacerbate or mitigate the value consequences of political corruption. Using federal corruption convictions data, we find that firm-level economic rents and monitoring mechanisms moderate the negative relation between corruption and firm value. The value consequences of political corruption are exacerbated for firms operating in low-rent product markets and mitigated for firms subject to external monitoring by state governments or monitoring induced by disclosure transparency. Our results should inform managers and policymakers of the tradeoffs imposed on firms operating in politically corrupt districts.

Financial relationships between neurologists and industry: The 2015 Open Payments database.

To analyze research and nonresearch payments from the pharmaceutical and device industry to neurologists in 2015 using the Centers for Medicare and Medicaid Services (CMS) Open Payments Database. In this retrospective database analysis, we computed the percentage of neurologists in the United States receiving payments, the median/mean payments per neurologist, payment categories, regional trends, and sponsors. We computed the number of practicing neurologists from the Association of American Medical Colleges State Physician Workforce Data Book, 2015. In 2015, approximately 96% of US neurologists received nonresearch payments totaling $93,920,993. The median payment per physician was $407. The highest proportion of neurologists (24%) received between $1,000 and $10,000. Food and beverage was the most frequent category (83% of the total number of payments). The highest amount was paid for serving as faculty/speaker for noncontinuing medical education activities (49%). The top sponsor of nonresearch payments was Teva Pharmaceuticals ($16,461,055; 17.5%). A total of 412 neurologists received $2,921,611 in research payments (median $1,132). Multiple sclerosis specialists received the largest proportion ($285,537; 9.7%). Daiichi Sankyo paid the largest amount in research payments ($826,029; 28%). The Open Payments program was established to foster transparent disclosure of physician compensations from industry, in response to legislative and public concerns of the effect of conflicts of interest on practice, education, and research. The effects of this program remain unclear and studies of changes in prescribing practices, costs, and other outcomes are necessary. CMS should ensure that incorrect information can be rectified quickly and easily.

Health system performance assessment in small countries: The case study of Latvia.

SummaryManaging the complexity that characterizes health systems requires sophisticated performance assessment information to support the decision‐making processes of healthcare stakeholders at various levels. Accordingly, in the past few decades, many countries have designed and implemented health system performance assessment (HSPA) programmes. Literature and practice agree on the key features that performance measurement in health should have, namely, multidimensionality, evidence‐based data collection, systematic benchmarking of results, shared design, transparent disclosure, and timeliness.Nevertheless, the specific characteristics of different countries may pose challenges in the implementation of such programmes. In the case of small countries, many of these challenges are common and related to their inherent characteristics, eg, small populations, small volumes of activity for certain treatments, and lack of benchmarks.Through the development of the case study of Latvia, this paper aims at discussing the challenges and opportunities for assessing health system performance in a small country.As a result, for each of the performance measurement features identified by the literature, the authors discuss the issues emerging when adopting them in Latvia and set out the potential solutions that have been designed during the development of the case study.

Determinants of Compensation Disclosure: Evidence From Reg. S-K 402(b)

This study investigates the determinants of compensation disclosure transparency in the context of the Securities and Exchange Commission (SEC) compensation regulation of 2006. Specifically, it focuses on incentive-related compensation disclosure required by Reg. S-K 402(b). I find that compensation disclosure transparency is negatively associated with managerial power and proprietary cost but is positively associated with external monitoring. These findings hold for both the pre- and postregulation periods. Furthermore, the effects from proprietary cost become weaker in the postregulation years, and stronger external monitoring tends to reduce the negative relations between compensation disclosure transparency and managerial power and proprietary cost. Finally, I document an inverted U-shape relation between excess CEO compensation and compensation disclosure transparency.

Environment Reporting in Annual Reports: A Comparative Analysis of Reporting Practices of Listed Firms in Nigeria

Environment reporting practice is a relatively new concept with a global affirmation and sanction. It requires transparency and sincerity of disclosure among the practicing firms and as required under the law. The broad objective of this study is to carry out a comparative analysis of reporting practices and its effect on performance (proxy by total assets) of listed oil and gas firms on the one hand and consumer goods firms in Nigeria (on the other hand). The study adopted the ex-post facto research design whereby existing and published data of reporting companies have been sought through their annual reports. Data for analyses were obtained through secondary sources, namely, the annual reports and accounts of the sampled companies. The Nigerian oil and gas subsector has 12 listed firms while the manufacturing sub-sector has 31 companies, from which three firms each (total of six) were sampled for the study. The purposive sampling technique was adopted in the choice of firm to be included in the study; Mobil oil and gas, MRS Oil Nig plc and Total Nig plc were chosen from the oil and gas sector while Nestle Nig plc, Nigerian Breweries plc, and Dangote flour Mills were selected from the consumer goods industry. The analyses adopted the use of SPSS version 20.0 and the essential tools were the correlation coefficient, the coefficient of determination and the simple regression analysis model. It was found that discretionary social responsibility reporting practices (donations and gifts) have significant effects on performance of both oil and gas firms and consumer goods companies in Nigeria. The study recommends that firms should consolidate on discretionary SR practices to ward off restiveness in the communities where they operate.

Spillovers in Sub-Saharan Africa’s Sovereign Eurobond Yields

ABSTRACT This study investigates the possibility of spillovers among Sub-Saharan African (SSA) eurobonds from January 2015 to June 2017 using secondary market yields. Our results indicate significant contagion effects among these bonds, effects that prove sensitive to major economic events and news announcements. They also suggest that less resilient economies transmit more to and receive less spillovers from their peers. SSA eurobond issuers can therefore increase their influence over the performance of their securities on secondary markets by mitigating their vulnerability to these effects. Besides strong macroeconomic fundamentals, an improvement in transparency and information disclosure is required in order to curb the asymmetry of information underlying investors’ behavior-based spillovers and contagion, which supports to a certain extent the market discipline hypothesis in the case of SSA eurobonds.

Bank Information Disclosure, Financial Transparency and Corporate Governance in Rastin Banking

Purpose: This paper aims to define a set of banking operating regulations for financial transparency, corporate governance, and bank information disclosure.&#x0D; Design: Bank governance, financial transparency, and information disclosure are amongst the most important solutions to attract public trust to financial and banking operations. In order to reach this goal, a new set of regulations should be designed to solve the problem. In this way, Rastin Banking regulations can provide a base to obtain a better information circulation and higher clarity.&#x0D; Findings: A draft of regulations for financial transparency, governance, and bank information disclosure is presented in this paper, which can be employed as a basis for the codification of the respective law.&#x0D; Research limitations: Since such kinds of regulations are novel for banks, they are required to be meticulously scrutinized in the first place, and after adaptation, adjustment, and performing the necessary modifications, the code of law can be codified.&#x0D; Practical implications: Bank managers, through granting various concessions to themselves and their own stakeholders, have violated the rights of shareholders, depositors, and other stakeholders. This issue, through applying the governance methods, is adjustable to a great extent.&#x0D; Social implications: This procedure is a model that can be adopted in other countries, especially those countries that have essential ambiguities in their banking and financial operations.&#x0D; Value: Clearly, the lack of transparency in banking operations can gradually weaken the trust of depositors, stakeholders, and shareholders, and result in probable abuses and damages to all parties in the bank’s contracts. This article fulfills an identified need and solves the practical problem in financial abuses, corruption, and collusion, and can provide positive and essential effects on creating public trust in financial operations.&#x0D;

Agency Theory and Corporate Governance in the Brazilian Public Service: A Theoretical Analysis

The Brazilian public service is governed by laws and regulations, which sometimes lead to a divergence of interests between the service provider and the contracting entity. Agency theory states that the delegation of powers to administrators who may not have any equity stake in the organization creates a separation between ownership and control. This situation results in a misalignment of interests between the owners, known as principals, and the hired managers, known as agents. The role of Corporate Governance is to oversee the relationship between management (agents) and owners (principals) and reduce the existing differences, particularly regarding information asymmetry. This paper, through a theoretical essay, aims to present the relationships established in the literature regarding Agency Theory and Corporate Governance in the context of the public sector and services. In this context, a robust Governance structure becomes essential for effective administration and management in public organizations. It is evident that the principles of Corporate Governance, such as Transparency (disclosure), Accountability, and Fairness, align with the principles of Public Administration, particularly in terms of Publicity and Morality.

Information Disclosure Ranking, Industry Production Market Competition, and Mispricing: An Empirical Analysis

Improving the transparency of corporate information disclosure is a key principle of corporate governance in Taiwan. This study uses the information disclosure assessment system established by the information disclosure and transparency ranking system to explore whether information transparency can reduce the degree of mispricing. The study uses the data of 10,686 listed companies in Taiwan for the period from 2005 to 2014. We find that a higher information disclosure ranking (IDR) of rated companies corresponds to a more substantial reduction in the degree of mispricing. Moreover, we discover that product market competition affects mispricing in that smaller degrees of mispricing reflect greater exclusivity; this suggests that lower industry transaction and competition costs lead to less substantial mispricing. Finally, we observe that the effect of information disclosure score on the degree of mispricing is lower in more exclusive industries. Furthermore, a regression process using instrumental variables reveals that IDRs have the significant effect of reducing the degree of mispricing.

Monitoring Policies and Gig Workers’ Job Preferences

Monitoring, a digital surveillance technology that allows employers to track the activities of workers, is ubiquitous in the gig economy where workforce is distributed. However, workers are often reluctant to be monitored due to privacy concerns, resulting in a hidden economic cost for employers as workers tend to demand higher wages for monitored jobs. To help employers make informed decisions about whether to adopt monitoring and what monitoring policy to use, we investigate how three common aspects of monitoring affect workers’ willingness to accept monitored jobs, as well as the underlying mechanisms, through online experiments on two gig economy platforms (Amazon Mechanical Turk and Prolific). The three aspects of monitoring are intensity (how much information is collected), transparency (whether the monitoring policy is disclosed to workers), and control (whether workers can remove sensitive information). We find that, as the monitoring intensity increases, workers become less likely to accept monitoring due to elevated privacy concerns. Furthermore, we find that being transparent about the monitoring policy increases workers’ willingness to accept monitoring only when the monitoring intensity is low, as transparent disclosure does not reduce privacy concerns over high-intensity monitoring. Interestingly, providing control over high-intensity monitoring does not significantly reduce workers’ privacy concerns either, rendering this well-intentioned policy ineffective. Finally, females are more willing to accept monitored jobs than males as they perceive higher payment protection from monitoring and have lower privacy concerns. On average, we estimate that the compensations required for workers to accept monitoring are $1.8/hr for AMT workers and $1.6/hr for Prolific workers, which translate to roughly 37.3% and 28.5% of their average hourly wages, respectively.