Voluntary Accounting Disclosures Research Articles

Voluntary Accounting Disclosure and its Role in Assessing the Financial Performance of Iraqi Commercial Banks

The objective of the study is to identify the concept of voluntary accounting disclosure and factors that influence the level of disclosure, the concept of financial performance assessment and indicators in Iraqi commercial banks, and to clarify the relationship between voluntary accounting disclosure and assessment of financial performance. The study concluded that voluntary disclosure contributes to the improvement of banks financial performance through its contribution to enhancing and improving the efficiency of using assets, enhancing the competitiveness of banks, attracting investors, and the existence of a relationship between voluntary disclosure and financial performance in those banks. The study recommended that attention should be paid to the importance of voluntary disclosure by relevant organizations and institutions and its role in providing information to external users, as well as the necessity of providing financial and other information in a timely manner to decision makers.

Do accounting disclosures help or hinder individual donors’ trust repair after negative events?

PurposeThis study aims to examine whether and how voluntary accounting disclosures can repair individual donors’ trust in a charity after negative events.Design/methodology/approachThe authors adopt a qualitative research approach and conduct 32 semi-structured interviews with active Australian individual donors, with a hypothetical vignette design. Hypothetical negative events and corresponding accounting disclosures are presented to participants during interviews.FindingsThree types of individual donors are identified based on their decision-making patterns after negative events and primary trust relations with a charity-reasoned donor (giving-decision based on their analysis of the situation, competence-based trust), generalist donors (giving-decision based on trust in the charitable sector, institution-based trust) and emotional donors (giving-decision based on feelings and emotions about the charity, integrity-based trust). The research suggests that accounting disclosures can repair trust damage for reasoned donors and support institution-based trust for generalist donors, but do not seem able to repair trust damage for emotional donors and can potentially damage trust further.Practical implicationsOverall, the findings suggest that a one-size-fits-all approach to communicating with individual donors after negative events is not likely to be very effective in repairing trust. Instead, charities may need to adapt disclosures to their different types of individual donors.Originality/valueWhile prior accounting studies have largely focussed on how charity managers themselves grapple with accountability or how negative events impact charitable donations, the authors demonstrate how accounting disclosures can play different roles in the trust-repairing process for different types of individual donors.

Voluntary disclosure of environmental performance after regulatory change

PurposeThe purpose of this study is to use recent US legislative activity surrounding changes to the Environmental Protection Agency (EPA)/Clean Air Act in 2010, which changes the practice of environmental policy of a firm, and the unique setting of Utility industry to examine the relationship between a firm’s voluntary accounting disclosure and environmental performance.Design/methodology/approachThis study features hand-collected data of environmental disclosure and examines its relation with environmental performance. To address the endogeneity problem, a difference-in-differences test with propensity score matching is performed to study the impact of policy change on environmental disclosure.FindingsThe findings of this study show that measures of environmental performance have a significant and positive association with a firm’s voluntary disclosure. The results from difference-in-differences test show that adjustments in environmental performance after regulatory change have a causal and positive effect on a firm’s voluntary disclosure.Research limitations/implicationsThe findings support theories of signaling and voluntary disclosure that better-performing firms provide more information disclosure of their environmental performance.Practical implicationsThe findings show real adjustments in firm environmental performance and consistent voluntary disclosure around the enactment of environmental legislation, which may have important implications for environmental rule making bodies and management about the effectiveness of their regulations.Originality/valueThis study is among the first to examine the causal relationship between environmental performance and disclosure within the context of recent changes in US environmental regulation. This study also provides the Utility industry experiment with difference-in-differences test to tackle endogeneity in the relation between performance and disclosure.

In memoriam: Professor David J. Campbell, 1963-2017

PurposeThis tribute is in memory of Professor David Campbell, who sadly died in June 2017. David was an influential and inspirational global researcher in accounting. This tribute summarises his significant contribution to the discipline as well as providing insights into his career at Northumbria and Newcastle Universities.Design/methodology/approachThe tribute provides a review of David’s research and his key publications in accounting. Specifically, his invaluable contribution to social and environmental accounting disclosure and related corporate accountability is highlighted.FindingsDavid was a hugely popular personality in the accounting research discipline and he will be missed by colleagues and friends across the world. His insightful research, thinking and engaging personality led to enduring friendships and significant collaborative research publications. David was a great supporter of international conferences at which he actively encouraged and nurtured research by others around him.Research limitations/implicationsDavid leaves a legacy of influential publications in accounting that have shaped the discipline and have helped develop solid foundations for rigorous future research in the area.Practical implicationsDavid’s research had significant practical implications with regard to the usefulness of voluntary accounting disclosure narrative to stakeholders. As well as highlighting the policy implications in relation to corporate disclosure, his work contributed to the debate concerning the accountability and ethics of organisations. Beyond research, David was also influential in professional accounting education as ACCA chief examiner for “Governance, Risk and Ethics”, embedding these issues into the curriculum.Social implicationsThe tribute highlights David’s global collaborative research friendships and their fruitful publications. He will be a huge loss to those people and others who knew him closely, as well as to the accounting community in general.Originality/valueDavid enhanced the discipline as we know it and through his work will continue to shape the discipline in years to come. David had a love for research and for others whom he knew through it.

نمط الإفصاح المحاسبی وعلاقته بمستوى الإفصاح عن المسئولیة الإجتماعیة للشرکة وأدائها المالی- ( دراسة امبریقیة على الشرکات السعودیة)

Accounting Disclosure Pattern and its Relationship with Disclosure Level for CSR and its Financial Performance (An Empirical Study on Saudi Companies) ملخص البحث هدفت الدراسة الى تقديم دليل تجريبي من بيئة الاعمال السعودية يسهم في توصيف العلاقة بين انماط الافصاح المحاسبي الاجتماعي التي تتبناها الشركات (وصفي، كمي غير نقدي، نقدي) ومستوى افصاحها عن مسئوليتها الاجتماعية وادائها المالي. لتحقيق هذا الهدف تم استخدام المنهج الوصفي التحليلي، حيث تم اختبار ثلاث فرضيات بحثية تتولى استكشاف العلاقة بين هذه المتغيرات في ظل وجود ستة متغيرات ضابطة هي: الدور المزدوج للمدير التنفيذي الاول، تركز الملكية، نسبة المديونية، الربحية، حجم الشركة، ونوع الصناعة، واستند بشكل اساسي في تطوير الفرضيات وتحديد الاتجاه المتوقع للعلاقات التي تتضمنها على نظريتي الاشارة والشرعية. وقد توصل البحث إلى النتائج التالية:1) ان انماط الافصاح المحاسبي الاجتماعي التي تتبناها الشركات السعودية لها تأثير ايجابي على ادائها المالي،2) وان هذا التأثير يعمل فقط من خلال تفاعل هذه الانماط مع مستوى افصاح الشركات عن مسئوليتها الاجتماعية، ومن ثم يكون لها تأثير وسيط أو منظم للعلاقة بين مستوى الافصاح الاجتماعــــــــي والاداء المالي، و3) ان هناك علاقة طردية بين درجة تطور نمط ومستوى الافصاح الاجتماعي، مما قد يشير الى ان الشركات السعودية - في سبيل تحسين أدائها المالي- قد تعمد الى تبني انماط افصاح محاسبي اجتماعي اكثر تطورا (الكمي، النقدي) كلما كان مستوى افصاحها الاجتماعي مرتفعا، واقل تطورا (الوصفي) كلما كان مستوى افصاحها الاجتماعي منخفضا. إن النتائج التي توصل اليها البحث الحالي ينتظر أن تمهد الطريق لدراسات وضعية وقياسية مستقبلية تستهدف التركيز على الكيف وليس الكم فيما يتعلق بالإفصاح المحاسبي الاختياري بصفة عامة والاجتماعي بصفة خاصة، بالإضافة الى أنها تلفت الانتباه الى أهمية نمط الافصاح المحاسبي ودرجة تطوره في التأثير على مضمون الرسالة المحاسبية التي يتم الافصاح عنها، وان اختيار نمط محدد للإفصاح الاجتماعي لا يتم بشكل عشوائي بل يكمن ورائه دوافع اقتصادية، وهو ما يفتح الطريق امام آفاق بحثية جديدة تركز على هذا الجانب. الكلمات الدالة: مستوى الافصاح عن المسئولية الاجتماعية للشركة، انماط الافصاح المحاسبي، الاداء المالي. Abstract The purpose of this study is to pro-vide empirical evidence from Saudi bu-siness environment that contributes to the characterization of the relationship between the patterns of corporate social accounting disclosure (descriptive, qua-ntitative non-monetary and mone-tary), disclosure level for corporate so-cial responsibility(CSR) and its fina-ncial performance. To achieve this pu-rpose an analytical descriptive method was used, where three research hypo-theses were tested for exploring the re-lationship between these variables. six control variables are included in the test model, namely: CEO duality, owner-ship concentration, debt ratio, profit-ability, firm size and type of industry. signaling and legitimacy theories are used to develop the research hypoth-eses. This study has reached the following results: 1) that social accounting dis-closure patterns adopted by Saudi co-mpanies have a positive impact on its financial performance, 2) and that this effect works only through interaction of these patterns with the level of CSR disclosure, and thus have a moderating impact on the relationship between so-cial disclosure level and financial per-formance, And 3) a positive correlation was found between degree of sop his-tication of accounting disclosure pattern and CSR disclosure level, which could imply that Saudi companies - to imp-rove their financial performance - adopt more sophisticated patterns of social accounting disclosure (quantitative, mo-netary) whenever the social disclosure is at a high level, and adopt a less so-phisticated patterns of social accounting disclosure (descriptive) whenever the social disclosure is at a low level. The findings of the current research are expected to pave the way for future positive and normative studies designed to focus on quality, not quantity with regard to voluntary accounting disclo-sure in general and social in particular, additionally, it draws attention to the importance of accounting disclosure pattern and its degree of sophistication in influencing the content of the acc-ounting message disclosed, The adopt-ion of a specific pattern of social disc-losure is not haphazard but behind ec-onomic motives, which opens the way to new research horizons focus on this aspect. Keywords: corporate social response-bility disclosure, accounting disclosure patterns, financial performance.

UM ESTUDO SOBRE AS EVIDENCIAÇÕES CONTÁBEIS DOS GOVERNOS DO DISTRITO FEDERAL E DOS ESTADOS BRASILEIROS SOB A ÓTICA DA TEORIA DA LEGITIMIDADE E DOS CUSTOS POLÍTICOS

Este estudo teve como objetivo investigar qual a aderência, sob a ótica da Teoria da Legitimidade e da hipótese de Custos Políticos, das evidenciações contábeis compulsórias e voluntárias que os Governos dos Estados brasileiros mais o Distrito Federal disponibilizam em seu sítio eletrônico. Com base na metodologia utilizada nos estudos de Beuren e Söthe (2009), Avelino et al. (2010), Araújo et al. (2014), e Araújo, Miranda e Lagióia (2015), foi uma pesquisa documental, qualitativa, com base na análise de conteúdo que buscou-se avaliar a evidenciação de informação compulsória estabelecida pela legislação; quais os tipos de evidenciações voluntárias divulgados; o nível de evidenciação voluntária e compulsória, conforme Hendriksen e Van Breda (1999), em adequada, justa e completa; categorizou-se os atributos das evidenciações tomando como critério para tal as características qualitativas da informação, contidas no Pronunciamento Conceitual Básico (R1). Concluiu-se que a maioria dos Governos Estaduais e do Distrito Federal não se sentem potencialmente ameaçados em sua legitimidade perante a sociedade, considerando o custo político do aumento dos níveis e qualidade das evidenciações frente à perda da legitimidade.

Evidence of voluntary accounting disclosures in the Athens Stock Market

PurposeThe purpose of this paper is to explore the motives for providing voluntary accounting disclosures and investigate the financial differences between voluntary and non‐voluntary disclosers. The paper also examines the association between the provision of voluntary disclosures and earnings management.Design/methodology/approachThe study utilises logistic regressions to test the hypothetical relations set up in the study. The categorisation of firms into those that report the minimum required by law and those that provide voluntary accounting information is based on the examination of firms' financial statements. Company categorisation is based on the construction of an index similar to the disclosure index formulated by the Center for International Financial Analysis and Research. Each sample firm obtains a score, with a higher score reflecting a more significant level of disclosure.FindingsThe findings show that voluntary disclosers exhibit higher profitability and growth and appear to be good news bearers. They also display a change in their management and a higher share trading volume. The results provide evidence that the provision of voluntary accounting disclosures is negatively associated with earnings management.Research limitations/implicationsThe study indicates that sound financial indicators and good news and prospects are likely to motivate firms to provide voluntary disclosures in order to attract investors' attention and communicate their managerial superiority or potential. Less information asymmetry and earnings management would lead to the disclosure of informative accounting information and would subsequently assist investors in making efficient decisions.Originality/valueThe contribution of the study lies in the fact that Greece is a particular case because it is a “rules‐based” code‐law country that involves high levels of standardisation and that has adopted IFRSs that are “principles‐based” and involve flexibility in financial reporting and judgment. Also, financial reporting in Greece is less restrictive in terms of disclosure requirements. The findings of the study are useful for financial analysts and investors, as they enable them to understand the financial attributes and motives of firms that provide voluntary disclosures as well as their earnings management inclination.

Earnings management and firm financial motives: A financial investigation of UK listed firms

This study focuses on the investigation of motives for and characteristics of UK firms that engage in earnings management activities. It concentrates particularly on the provision of voluntary accounting disclosures, the violation of debt covenants, management compensation, and on the equity and debt capital needs of firms and their relation with the use of earnings management. The study examines also the earnings management inclination of firms that seek to meet or exceed financial analysts' forecasts. The findings generally indicate that firms with low profitability and high leverage measures are likely to use earnings management. Also, firms that are in equity and debt capital need and are close to debt covenant violation also appear to be inclined to employ earnings management practices. Likewise, firms tend to use earnings management to improve their financial numbers and subsequently reinforce their compensation and meet and/or exceed financial analysts' earnings forecasts. In contrast, the study shows that firms that provide voluntary accounting disclosures appear to be less inclined to make use of earnings management.

Voluntary accounting disclosure and corporate governance: evidence from Greek listed firms

A hypothesis on financial accounting disclosure practices has been established in prior literature. The hypothesis was that financial accounting disclosure practices are not arbitrary, but are influenced by company characteristics and corporate governance. In order to examine the validity of this hypothesis, two disclosure indexes were built using as sample the published Annual Reports for 2004 of all the listed manufacturing and construction companies in the Athens Stock Exchange (ASE). The first index contains items which are mandatory according to Greek General Accepted Accounting Principles (GAAP); and the second index contains items which are mandatory according to a number of selected International Accounting Standards (IASs) but which were voluntary at the time that the research was conducted. The study used a cross-section model, in which each type of disclosure index was regressed on proxy-related variables with corporate governance and voluntary disclosure in order to detect the existence of a statistically significant relationship. The major finding of this research is that there is a significant extent of noncompliance in respect of IASs and the disclosures of Greek regulations. The key factors associated with the levels of compliance with IASs include the composition of the Board of Directors, profitability and the number of common shares. The public firms in the sample have shown that because of the political cost, the management is forced to disclose accounting data and support transparency.

Voluntary IAS 1 accounting disclosures prior to official IAS adoption: An empirical investigation of UK firms

This paper focuses on firms’ voluntary compliance with the reporting requirements of the International Accounting Standard (IAS) 1 before the official adoption of IASs. The paper seeks to identify the motives for the voluntary adoption of IAS 1 and investigates the relation to the provision of voluntary accounting disclosures, the increase in equity capital, managers’ remuneration and firms’ stock returns. The study shows that the decision-making process of firms is significantly influenced by the intention to improve key financial measures, such as leverage, profitability and growth. Firms would tend to adopt an accounting policy or regulation when they feel that adoption would favourably impact on their financial situation. For example, the study indicates that firms voluntarily adopted IAS 1 before the official IAS adoption date in order to provide evidence of superior managerial ability and high quality reported accounting information. It is found that firms that perform well are more motivated to voluntarily abide by IAS 1. The study also reports that firms that provide voluntary accounting disclosures and perform increases in their equity capital appear to voluntarily adopt IAS 1. Similar findings are obtained for firms that display higher management remuneration and stock returns.

Voluntary Accounting Disclosures by U.S.-Listed Asian Companies

The current study examines the voluntary disclosures (provided in the U.S.) by U.S.-listed Asian companies. Our findings indicate that significantly fewer (greater) voluntary disclosures are provided by U.S.-listed Asian companies from countries which have a strict (less strict) mandatory disclosure regime in their home country. This finding is contrary to the model developed in Einhorn 2005. In addition, this study documents that over 80 percent of U.S.-listed Asian companies are voluntarily using “international” standards for their financial statements and thus contributing towards international accounting convergence. However, their choice to use “international” standards is not affected by their proportion of foreign sales or size. An important contribution of this study is the development of a measure for strictness of mandatory disclosure regimes of Asian countries by using expert rankings.

Voluntary Accounting Disclosures by U.S.-Listed Asian Companies

The current study examines the voluntary disclosures (provided in the U.S.) by U.S.-listed Asian companies. Our findings indicate that significantly fewer [greater] voluntary disclosures are provided by U.S.-listed Asian companies from countries which have a strict [less strict] mandatory disclosure regime in their home country. This finding is contrary to the model developed in Einhorn, 2005. In addition, this study documents that over 80 percent of U.S.-listed Asian companies are voluntarily using international standards for their financial statements and thus contributing towards international accounting convergence. However, their choice to use international standards is not affected by their proportion of foreign sales or size. An important contribution of this study is the development of a measure for strictness of mandatory disclosure regimes of Asian countries by using expert rankings.

Global Evidence on Incentives for Voluntary Accounting Disclosures and the Effect on Cost of Capital

This study provides international evidence that external financing dependence creates incentives for firms to undertake a higher level of voluntary accounting disclosure. For a sample of 856 observations from 34 countries and 18 different manufacturing industry sectors, we document that firms in industries that are more dependent on external financing also have higher average levels of accounting disclosure. This result holds after controlling for country-level differences in legal and financial systems, and firm-specific controls for firm size and performance. We then show that firms with higher disclose levels also have a lower cost of capital, which is evidence that voluntary accounting disclosures reduce information asymmetry and lower the firm's cost of external financing. These results are robust across a wide range of legal and financial systems around the world, and underscore the importance of accounting disclosures in firm financing decisions.

The changing nature of financial disclosure in Japan

This paper investigates whether Japanese companies listed on the Tokyo Stock Exchange (TSE) altered their voluntary accounting disclosure behavior over the period of the 1990s. It implicitly tests for whether the collapse of Japan's “Financial Bubble” in the late 1980s altered the incentives of Japanese managers to be more forthcoming about corporate information. Previous research on Japanese disclosure practices highlights the “secretive” nature of Japanese managers and suggests that cultural preferences strongly discourage disclosure. Our findings suggest that Japanese disclosure practices are sensitive to economic conditions.

Corporate Disclosure of Environmental Liability Information: Theory and Evidence*

Abstract. The decision to disclose information concerning a firm's environmental liabilities is modeled as a sequential game involving the firm, a capital market, and outside stakeholders who can impose proprietary (political) costs on the firm. A partial disclosure equilibrium is derived in which firms reveal information strategically, maximizing the share‐value net of expected political costs. Inherent uncertainty regarding the existence and size of the liabilities creates a setting where outsiders are uncertain if management is informed about these liabilities, so firms can plausibly withhold “bad news”, that is, they do not disclose liabilities that exceed a threshold level. Three novel hypotheses are that a firm is more likely to disclose as (1) its pollution propensity increases, (2) outsiders' knowledge of its environmental liabilities increases, and (3) the risk of incurring proprietary costs decreases. Empirical support is found for the hypotheses, based on the accounting disclosures made by sample firms selected from the records of the Ontario Ministry of the Environment and Energy.Improved accounting and auditing standards for environmental disclosure would build on at least three implications of the study: To the extent that inherent uncertainty leaves managers with discretion as to what to disclose, the partial disclosure equilibrium result suggests that not all firms will comply with disclosure standards. Publishing broad environmental performance indicators for companies in nonaccounting outlets would increase public awareness of a manager's private information endowment, making voluntary accounting disclosures of the liabilities more likely. If a significant decline in stakeholder tolerance of pollution occurs, the expected proprietary costs of disclosing increase, and companies become less likely to disclose.

The benefits and costs to managers of voluntary accounting disclosure — A discussion of: “Current cost disclosers and nondisclosers: Theory and Canadian evidence”

The benefits and costs to managers of voluntary accounting disclosure — A discussion of: “Current cost disclosers and nondisclosers: Theory and Canadian evidence”