Voluntary Information Disclosure Research Articles

The compounding effect of mandatory GHG emissions disclosure and voluntary ESG disclosure on firm value in Korea

PurposeThis study attempts to examine the effect of greenhouse gas (GHG) emissions disclosure and its compounding effect with environmental, social, and governance (ESG) disclosure on firm value in Korea. This study focuses on the unique institutional setting in Korea that implements mandatory GHG emissions disclosure and voluntary ESG disclosure.Design/methodology/approachUsing a dataset comprising 25,968 firm-year observations from publicly listed Korean firms from 2000 to 2021, we applied an ordinary least squares (OLS) regression model to test hypotheses.FindingsThe results show that, in a voluntary disclosure regime, ESG disclosure has a positive impact, whereas in a mandatory disclosure regime, GHG emissions disclosure has a negative impact on firm value. The results also indicate that when a firm discloses both its GHG emissions and ESG performance information, the voluntary disclosure of ESG information synergistically mitigates the adverse effects of mandatory disclosure of GHG emissions information. This synergy contributes significantly to enhancing the firm’s overall value. The findings indicate that a firm can enhance its value by proactively disclosing ESG information, especially when it is compulsorily required to report GHG emissions data.Originality/valueThis study investigated the effect of corporate non-financial disclosure on firm value by shedding light on the differential attributes between voluntary and mandatory disclosures and between quantitative and qualitative information.

Voluntary disclosure of verifiable information with general preferences and information endowment uncertainty

AbstractWe study a voluntary disclosure model with verifiable information, a range of sender and receiver preferences, and uncertainty about whether the sender is informed. When a sender's preferences are insensitive to the state relative to the receiver's, a sender discloses moderate news and suppresses extreme news. We also find a partial revelation equilibrium where the sender's message is an interval containing the realized state. When a sender's preferences are sensitive to the state relative to the receiver's, the sender withholds moderate news and discloses extreme news. The latter disclosure is more consistent with extant empirical findings about voluntary managerial disclosure.

Environmental, social, and governance evaluation for European small and medium enterprises: A multicriteria approach

AbstractThe exposure to environmental, social, and governance (ESG) risks can be effectively measured by companies to identify opportunities for long‐term sustainable growth, along with the social and environmental impact. This process is crucial for listed small and medium‐sized enterprises (SMEs) wanting additional support in their ESG transition, and for European SMEs it will be required by the implementation of the Corporate Sustainability Reporting Directive (CSRD), starting from 2026. In this contribution, we propose to apply a multicriteria decision aiding approach to assess the sustainability profiles of SMEs. The methodology, which allows the measurements of a firm's ESG efforts (ESGness), is applied to a sample of European‐listed SMEs, controlling for potential sector‐specific effects, in order to understand what is the situation on the ESG front, and to identify ESG leaders and laggards. The model can provide valuable information for the firm, and for a broad spectrum of stakeholders, including policymakers and investors. The obtained rankings show some degree of robustness across different model parameterizations. The benefits of voluntary disclosure of sustainability information are investigated under a prudential scoring framework.

Information Disclosure and Competitive Dynamics: Evidence from the Pharmaceutical Industry

This paper studies how competitive dynamics shape innovative firms’ voluntary disclosure of product quality information. Our empirical context is the pharmaceutical industry, where firms must decide whether to disclose private drug quality information acquired in clinical trials. Using a difference-in-difference strategy, we show that the approval of a competitor’s drug lowers the likelihood of a firm reporting its clinical trial results by 13%. We explore how these effects vary based on the project quality, competitor type, and firm experience. These findings suggest that strategic considerations play a role in firms’ disclosure decisions; in response to a competitor’s drug approval, firms may selectively withhold information to maintain and improve their competitive position. This paper was accepted by Joshua Gans, business strategy. Funding: This work was funded by the National Institute on Aging [Grant T32-AG000186] and the UCLA Society of Hellman Fellows Program. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01161 .

The impact of environmental, social and governance disclosure on stock prices: Empirical research in Vietnam

The aims of this research is to evaluate the impact of Environmental, Social and Governance (ESG) information disclosure (using both financial and non-financial information) on stock prices of businesses in Vietnam; From there, propose recommendations to promote transparent practices and information disclosure about ESG of businesses related activities; Contribute to developing sustainable investment goals in businesses, and the financial market in general. Based on the (Ohlson, 1995) [40] valuation model, and developed by Barth and Clinch (2009) [41] the research was conducted empirically in 30 listed companies in Vietnam in the period 2019–2022. Research results based on the GLS method show that ESG positively impacts stock prices. Additionally, this paper conducted an in-depth analysis of each individual pillar and found that the environmental pillar was considered the most meaningful to market participants. However, the correlation between ESG and stock prices is weakened for environmentally sensitive businesses. This study also makes a valuable contribution to the current literature on non-financial information reporting by using manually collected data and investigating the effects of ESG reporting on market participants in the public system voluntary information disclosure system of an emerging market like Vietnam.

Capital Market Consequences of Information about Individual Auditors

Synopsis The research problem This study examines the capital market consequences of the voluntary disclosure of individual auditor information. Specifically, we examined whether and how the disclosure of auditor qualification certificates is associated with information asymmetry and investors’ responses to earnings. Motivation Regulators have recently started to focus on disclosing auditor information beyond their names such as in China, where it is increasingly important in practice. Although prior studies have demonstrated benefits associated with the mandatory disclosure of partners’ names, there is relatively little evidence of the usefulness of additional information about individual auditors that could be provided voluntarily. This study sheds light on the economic consequences of disclosing detailed information about individual auditors and extends the voluntary disclosure literature. The test hypotheses We tested the following hypotheses in this study: (a) voluntary disclosure of auditor qualification certificates is associated with lower information asymmetry and (b) voluntary disclosure of auditor qualification certificates is not associated with investors’ reactions to corporate earnings announcements. Target population Stakeholders of listed companies and audit firms, including company managers, investors, and accounting regulators. Adopted methodology Ordinary least squares regressions, archival data, interviews, and machine learning methods to obtain initial data. Analyses We first crawled the annual audit reports of listed companies in China and used machine learning methods to capture voluntary disclosure of auditor qualification certificates. In a sample of more than 14,000 Chinese company-years from 2012 to 2018, we identified 10.5% of the observations voluntarily disclosing auditor qualification certificates. We used the bid-ask spread as the proxy of information asymmetry, and the earnings response coefficient refers to the coefficient on unexpected earnings to the cumulative abnormal returns. Findings We found that the voluntary disclosure of auditor qualification certificates is associated with lower information asymmetry and stronger market reaction to earnings announcements. The main results hold through various robustness tests. Cross-sectional analyses show that this association is less pronounced when a company employs a larger audit firm or has higher analyst coverage. Further, the specific information conveyed by the auditor qualification certificate, such as the auditor’s facial trustworthiness, helps explain the economic consequences associated with voluntary auditor qualification certificate disclosure. Moreover, an initial disclosure of auditor qualification certificates is associated with greater effects.

Voluntary food safety information disclosure and corporate financing structure: based on the perspective of trade credit

ABSTRACT The voluntary disclosure of food safety information by companies has attracted significant attention. We empirically examine the impact of voluntary food safety information disclosure (VFSID) on corporate financing structure from the perspective of trade credit. We discover that VFSID reduces corporations’ reliance on trade credit. We find that VFSID reduces corporations’ reliance on trade credit by facilitating additional bank credit. We also observe that the impact of VFSID on corporate trade credit is particularly pronounced for enterprises that disclose more material information and possess stronger motivation for financing structure adjustments. We further explore the economic consequences and find a significant reduction in the cost of corporate financing when corporate trade credit decreases due to VFSID. Our findings enrich the literature on VFSID and financing structure, verify the substitution relationship between bank credit and trade credit, and provide empirical evidence to optimize the financing structure of corporations, reduce the cost of corporate financing, and promote the smooth flow of the supply chain cycle.

R&D tax allowance and voluntary information disclosures

Purpose: This paper examines whether the R&D tax allowance in force in Poland since 2016 has increased the voluntary disclosure of information on innovation, R&D, and strategic plans in the management commentary of companies listed on the Warsaw Stock Exchange (WSE). Methodology/approach: First, the Tobit model was used to examine the determinants of recognising development works in a sample of 29,288 observations from 3,406 firms. Second, it uses logit and generalised least squares (GLS) methods to analyse 556 management commentaries from 97 public companies that benefited from the R&D tax allowance between 2016 and 2021. Findings: We show that tax relief increases the probability of recognising develop-ment work and disclosing information about patents to signal innovativeness and engagement in R&D. Indebted companies disclose more R&D information and strategic plans. IFRS and advanced management increase disclosures, as opposed to tax planning that uses tax havens or that is supported by more advisors. Companies audited by the Big 4 provide fewer details on R&D outcomes and strategic plans. Research limitations/implications: Extending the sample requires collecting disclosure data based on the wording in management commentaries using text-mining tools. Originality/value: The paper contributes to the literature by identifying that R&D tax allowance influences voluntary R&D information disclosure in management commentaries, especially by smaller companies in debt with larger intangible assets.

Voluntary Disclosure in Asymmetric Contests

Abstract This article studies the incentives for interim voluntary disclosure of verifiable information in probabilistic all-pay contests with two-sided incomplete information. Private information may concern marginal cost, valuations, and ability. Our main result says that, if the contest is uniformly asymmetric, then full revelation is the unique perfect Bayesian equilibrium outcome. This is so because the weakest type of the underdog reveals her type in an attempt to moderate the favourite, while the strongest type of the favourite tries to discourage the underdog—so that the contest unravels. This strong-form disclosure principle is robust with respect to correlation, partitional evidence, randomized disclosures, sequential moves, and continuous type spaces. Moreover, the assumption of uniform asymmetry is not needed when incomplete information is one-sided. However, the principle may break down when type distributions are too similar, contestants possess commitment power, or information is unverifiable. In fact, cheap talk will always be ignored, even if mediated by a trustworthy third party.

Sustainability Reporting and Performance of Selected Quoted Firms in Nigeria

The performance of quoted firms listed on the Nigerian Exchange Group (NGX) is crucial for driving economic development, job creation, and wealth generation in Nigeria. Despite the growing interest in sustainability practices among Nigerian firms, there is a lack of empirical research examining the relationship between sustainability reporting and financial performance. To address this gap, this study conducted a comprehensive analysis of the link between sustainability reporting and the financial performance of quoted firms in Nigeria. This research employed an ex-post facto research approach, utilizing data from annual reports, financial statements, and sustainability reports of 153 publicly listed companies on the Nigerian Exchange Group (NGX). Through quantitative methods, the study assessed the extent and quality of sustainability reporting among Nigerian companies and its relationship with financial performance indicators. A purposive sampling method was used to select a sample of 10 firms known for their voluntary disclosure of information in financial reports. The study spanned from 2012 to 2021, totaling 10 years, and involved both descriptive and inferential statistical analyses of the collected data. Using regression analysis, the study found a statistically significant positive impact of sustainability reporting metrics - including governance information disclosure, credibility information disclosure, and environmental profile disclosure - on firm performance. This suggests that companies in Nigeria that disclose information regarding governance policies, credibility, and environmental practices tend to perform better financially.This study concluded that companies that engage in transparent reporting regarding governance policies, credibility, and environmental practices demonstrate better financial performance. Based on the findings, it is recommended that Nigerian regulators and policymakers encourage and support sustainability reporting initiatives among quoted firms.

ACCOUNTING INFORMATION DISCLOSURE: HOW FAR IS SO FAR

Purpose: Accounting information asymmetry increases moral hazard, agency costs, shareholders’ discontent, and further aggravates the discomfort of minority shareholders. As such, how far is so far when connecting information disclosure with firm characteristics has remained a debate. This study thus investigated the nexus between firm characteristics and accounting information disclosure with emphasis on the banking sub-sector in Nigeria. Theoretical Framework: Accounting information disclosure is not hidden from theoretical discussions within the corridors of opportunistic behaviors, agency-theory and information asymmetry or information failure theory Design/Methodology/Approach: Annual reports of eleven top banks in Nigeria were analyzed covering a period of 5 years from 2010 to 2014 using the firm characteristics – size, profitability, age, and international presence. A disclosure checklist consisting 137 voluntary items was developed and multiple regression analysis performed. Findings: The results revealed a positive significant relationship between accounting information disclosure with age, international exposure, and a negative significant relationship was observed for profitability and size. Generally, the level of disclosure in the banking sector was found to be high at 62%. Research, Practical & Social Implications: This study recommends accounting information democratization and sharing to build and restore confidence in banks’ activities and public perception. Originality/Value: The investigation on how far is so far in accounting information disclosure should be perceived from the eye of the stakeholders investments. Be that as it may, it is only fair and ethically moral for persons/groups that have invested in a business and or in a bank to regularly have access to concrete and verifiable mandatory and voluntary information disclosure on the financial position of their hard-earn funds to make reasonable decisions.

Pathos or logos? How governance legitimacy perception influences individual privacy trade-offs during COVID-19 pandemic

The COVID-19 pandemic has brought attention to the delicate balance between individual privacy concerns and the governance of public health emergencies. Governments are leveraging a wide range of digital methodologies to acquire individual-level data for purposes such as contact tracing, isolation protocols, and surveillance, all aimed at effectively mitigating the deleterious consequences of the epidemic. However, the surrender of individual health information depends on individuals’ perception of the legitimacy of governance. In this research, our objective is to examine how individuals’ perceptions of the legitimacy of governance impact their decisions regarding privacy disclosure. This study stands out by dissecting cognitive and moral legitimacy of governance, uniquely examining their influence on individuals’ altruistic privacy disclosure during a crisis. Unlike previous research, our approach offers a more nuanced understanding of the interplay between governance legitimacy and privacy concessions. From July 15th to August 14th, 2022, amid the 2022 lockdown in Shanghai, China, this study utilizes surveys with established measurement scales, alongside structural equation modeling (SEM), to explore the relationship between individuals’ perceptions of government legitimacy in managing the pandemic and their willingness to compromise health information. The study distinguishes between moral legitimacy (pathos) and cognitive legitimacy (logos). The results find that both cognitive and moral legitimacy positively influence altruism, thus enhancing the efficacy of voluntary disclosure of personal health information to government agencies for pandemic governance. However, it is noteworthy that education level moderates the impact of these two dimensions of legitimacy on altruism. This research provides empirical evidence to enhance our understanding of how different dimensions of citizens’ perceptions of governance legitimacy in crisis situations shape their attitudes and behaviors towards privacy trade-offs.

Drivers and consequences of borrowers' voluntary privacy information disclosure—Evidence from a Chinese online consumer financing platform

AbstractThis study explores the drivers and consequences of consumers' voluntary information disclosure in the context of online consumer financing. Using unique secondary data from a Chinese online consumer financing company, we uncover a non‐linear relationship between borrowers' credit ratings and the quantity of voluntary information disclosure, and an inverted U‐shaped relationship between the amount of information disclosure and loan default. Specifically, low‐credit borrowers who opt for more voluntary information disclosure manifest a higher likelihood of default than those who disclose less, suggesting a strategic inclination toward information disclosure. Finally, we identify that disclosing high‐cost information reduces loan default, whereas disclosing low‐cost information increases default. Our findings enrich the existing literature on consumer information disclosure by providing insights into the underlying motivation and highlighting the applicability of signaling theory and privacy calculus theory. This has practical implications for lenders, borrowers, and regulators in overcoming barriers in online lending.

Sustainability disclosure in the pharmaceutical and chemical industries: Results from bibliometric analysis and AI-based comparison of financial reports

Climate change is a pressing global challenge, and companies are under increasing pressure to adopt sustainable practices and transparently disclose their environmental performance. This study focuses on the Italian pharmaceutical industry to gain insights into the level of stakeholder and management attention to climate change and the growth of academic research in this critical area. We employ a bibliometric analysis of scientific literature and a content analysis of financial statements to examine sustainability practices and reporting in both pharmaceutical and chemical companies.Our findings reveal a significant difference in stakeholder expectations and commitment to addressing climate change between the two industries. The chemical industry has demonstrated a stronger focus on sustainability, as evidenced by higher academic research and environmental disclosure levels. In contrast, the pharmaceutical sector has shown a comparatively lower level of environmental reporting and sustainability practices. However, our analysis shows a positive trend in pharmaceutical companies’ voluntary disclosure of environmental information in their financial reports.These results highlight the need for increased focus and effort in the pharmaceutical industry to address climate change and improve sustainability practices. Pharmaceutical companies can build stakeholder trust, improve environmental sustainability, increase transparency in reporting, align practices with global sustainability goals, enhance their reputation, and reduce their environmental impact. This research provides valuable guidance for policymakers, researchers and practitioners in promoting sustainable practices in the pharmaceutical industry and contributes to the broader understanding of ESG disclosure and climate change.

Research on Enterprise Green Accounting Information Disclosure under the Background of Low-carbon Economy

In order to explore the low carbon economic background of green accounting information disclosure, understand the industry how to adapt to the sustainable development and environmental trends, the article from the overview of the low carbon economy, analyzes the low carbon economy of home appliance enterprise green accounting information disclosure requirements, after according to the current home appliance enterprise green accounting information disclosure problems put forward the specific solutions, including encouraging home appliance enterprise voluntary disclosure of social responsibility information, improve the home appliance enterprise green accounting information disclosure constraint system, improve the home appliance enterprise green accounting information disclosure content, etc. Research shows that the green accounting information disclosure in the home appliance industry plays a key role in the era of low-carbon economy, and helps to improve the sustainability, transparency and credibility of enterprises. However, there are still some challenges, in order to achieve a greener and more sustainable economic development, home appliance enterprises need to further improve their green accounting information disclosure practices to meet the growing demand for environmental protection.

Disclosure-based regulation and municipal security trade prices

Purpose This paper aims to measure the trade price impact of a recent regulatory disclosure intervention in municipal securities secondary markets, which required broker-dealers to disclose securities trading information on a near-real-time and continuing basis. Design/methodology/approach The author analyzes trade price outcomes in the preintervention and postintervention regimes using a suite of time series estimations that give heteroskedasticity-robust standard errors (Prais–Winsten and Cochrain–Orcutt), accommodate higher-order lag structure in the error term (autoregressive integrated moving average) and account for volatility clustering in the time series (generalized autoregressive conditional heteroskedasticity). Findings Results show that regulatory disclosure intervention significantly improved trade price efficiency in municipal securities secondary markets as daily trade price differential and volatility both declined market-wide after the disclosure intervention. Research limitations/implications The sample consists of trades in State of California general obligation bonds; therefore, empirical findings may not be generalizable to other states, local governments and different types of bonds. Practical implications The findings highlight voluntary information disclosure as a practical and effective mechanism in disclosure regulation of municipal securities secondary markets. Originality/value Only a small body of work exists that examines information disclosure regulation in municipal securities secondary markets; therefore, this paper expands knowledge on the topic and should provide renewed impetus for regulatory efforts aimed at improving the efficiency of municipal capital markets.

Evidence of sustainable development goals disclosure in publicly traded Brazilian companies

Purpose: This article examines if publicly traded Brazilian companies listed on the Brazil 50 Index (IBrX50) and the Corporate Sustainability Index (ISE) use Sustainable Development Goals to guide their environmental, social, and governance practices (ESG).
 Methodology: The evaluation is carried out through the descriptive content analysis of companies listed on the IBrX50. We highlight that they were also listed on the ISE B3 in the year 2022. Data was gathered from the companies’ sustainability reports and on websites specialized in ESG assessments.
 Results: The research presents analogies between the ISE B3 and the IBrX50 theoretical portfolios while analyzing the assets in their portfolios and ESG scores. We additionally look into the proximity of the assets in relation to the disclosure of the Sustainable Development Goals in their sustainability reports. We found that, although most companies publish sustainability reports and mention the SDGs, few disclose the goals and initiatives aimed at sustainable development practically.
 Contributions of the Study: The article contributes to the field of research on the voluntary disclosure of information on sustainability. It presents an initial overview on SDGs disclosure in sustainability reports within the Brazilian context. Future studies may explore analyzes which include ESG practices in companies.

Estrutura do conselho de administração como mecanismo para atingir a Agenda 2030 na América Latina

Abstract This study aims to investigate the effect of board structure on companies’ engagement with the Sustainable Development Goals (SDGs). The characteristics of the board of directors related to the size of the board, independence, and diversity were analyzed, as well as the disclosure of the 17 SDGs of 371 companies headquartered in Latin America from 2016 to 2020. The data were analyzed using data regression in a panel with fixed effects and regression of panel data using the logit method. Research findings showed that board size and board independence have a positive effect on SDG disclosure. The results are in line with the Upper Echelons Theory, as it advocates that the company’s strategic choices and positioning are made by senior management - the members of the board of directors. The research expands the explanation of this theory, confirming that top management is crucial for strategic positioning in environmental and social issues. Managers and shareholders must understand that certain features, such as the social responsibility committee and the preparation of a sustainability report, can also contribute to the 2030 Agenda. At the government level, the results are useful for public policy makers, as they can encourage the creation of norms for the voluntary disclosure of environmental and social information.

The impact of disclosure characteristics of conference calls on bankruptcy risk: From perspectives of redundancy and boilerplate

In recent years, the volatility of global financial markets has attracted widespread attention, particularly due to numerous bank bankruptcies it has triggered. This gradual realization underscores the critical importance of adequate information disclosure for a company’s stable operation. Conference call represent a significant form of voluntary information disclosure by businesses. This paper aims to study the impact of redundancy and boilerplate in conference call on a company’s bankruptcy risk. By quantifying redundancy and boilerplate indicators in conference call textual data as explanatory variables and employing Altman’s Z-score model to measure a company’s bankruptcy risk as the explained variable, the study utilizes a fixed-effects model for regression analysis and conducts robustness tests on the model. The final research findings indicate that lower redundancy and higher boilerplate in conference call documents are conducive to reducing a company’s bankruptcy risk, thereby aiding companies in achieving long-term, stable operational status. These research results hold significant reference value for investors and corporate managers in the financial market, providing insights into enhancing corporate stability and market trust through improved methods of telephone conference information disclosure.

Why do audit clients voluntarily disclose the compliance and planning components of auditor provided tax services?

Criticisms of audit firms marketing and devising tax avoidance strategies for their audit clients have led to calls from regulators, investors, and proxy advisors for more detailed disclosures on the composition of tax non-audit services (NAS). Using a hand-collected dataset, we examine the determinants of audit clients’ voluntary bifurcation of total tax NAS fees into the tax planning and compliance components, and the effect of these voluntary disclosures on firm value. We find that firms with higher levels of tax NAS are more likely to provide this disclosure, as well as firms that engage in higher levels of tax avoidance and have accounting experts serve on the audit committee. Using textual analysis, we find that among voluntary tax NAS fee breakdown disclosers, firms with higher total tax and, specifically, tax planning NAS fees have longer and less similar tax NAS fee disclosures relative to the prior period disclosure. Our firm value analyses indicate higher valuations for firms providing voluntary breakdown disclosures when these disclosures reveal high tax NAS fees generally, and high tax planning NAS fees specifically. The firm valuation effects are incrementally more pronounced when voluntary tax NAS fee breakdown firms report higher tax avoidance and expert audit committee oversight. Our results suggest that the voluntary disclosure of private information regarding the nature of tax NAS is one mechanism through which firms facing scrutiny over the implications of these services can alleviate information asymmetry and stakeholder skepticism of tax NAS.