Voluntary Disclosure Research Articles

ANALISIS PENERAPAN AKUNTANSI LINGKUNGAN PADA INDUSTRI TEKSTIL YANG TERDAFTAR DI BEI

Currently, the problem of environmental damage has become a public concern. Textile companies are a significant source of environmental pollution due to the trash they generate throughout their production activities. Accounting contributes to environmental preservation by incorporating voluntary disclosure of environmental costs or expenses in financial statements. However, there is no standardized approach to environmental accounting disclosures within the PSAK.The study examines environmental cost accounting in 20 BEI-registered textile companies' financial statements or annual reports. The data comes from BEI-registered textile companies' annual financial statements. The study examined textile manufacturers' yearly accounting implementation using qualitative descriptive methods. Based on their corporate annual reports' CSR sections, only 10 out of 20 textile businesses have incorporated environmental accounting. Only 4 out of 10 corporations disclose their environmental expenditures in their financial or annual reports.

Do Reported Intangible Assets Create a Better Information Environment?

Purpose: This study investigates whether the identifiable intangible assets (IIA), goodwill (GW), and research and development expense (R&D) reported in the financial statements and annual reports of firms on the Stock Exchange of Thailand (SET) can improve the information environment, as represented by a narrower bid-ask spread in the capital market. Additionally, this study explores the impact of intangible asset disclosure scores on the information environment. Design/methodology/approach: This study tests the association between reported intangible assets, intangible asset disclosure score, and bid-ask spread. The sample is 2,691 firm-year observations in SET from 2012-2021, and ordinary least squares (OLS) regression is used to test the hypothesis. Findings: The results found that IIA and R&D are associated with the information environment. It is reported that IIA and bid-ask spread have a positive relationship, whereas R&D and bid-ask spread have a negative relationship. In addition, the intangible asset disclosure score can also reduce bid-ask spread. Research limitations/implications: This study highlights the benefits of intangible assets, which can help bridge the information gap. However, the intangible asset disclosure score is determined through self-index construction. This process involves discretion and may be prone to errors. Furthermore, using the bid-ask spread as the sole indicator of the information environment might be inadequate. Originality/value: Research on information asymmetry about intangible assets in Thailand is scarce. This study provides empirical evidence to support the benefit of some intangible assets in reducing asymmetric information among investors. By utilizing the intangible asset disclosure score, including mandatory and voluntary disclosure, it is also possible to observe how different disclosure quality levels impact the information environment.

Exploring the nexus between past financial performance and voluntary GRI adoption: The role of environmental certification

Numerous firms have adopted the Global Reporting Initiative (GRI) standards to enhance sustainability. Using panel data from 2008 to 2020, we employ logit, probit, complementary log-log, and Cox survival analysis models to explore the factors which affect the adoption of the GRI standards in the context of voluntary disclosure in China. Our findings indicate that past financial performance significantly influences decisions on GRI adoption. Environmental certification moderates the effect of financial performance on GRI adoption. Notably, the cross-sectional test reveals that financial performance plays a stronger role in GRI adoption among companies with low information transparency compared to those with high information transparency.

Investor-Paid Credit Ratings and Managerial Information Disclosure

Unlike issuer-paid credit rating agencies (CRAs), investor-paid CRAs are compensated by investors for providing rating services. Exploiting the staggered timing of rating initiation by an investor-paid rating agency (the Egan Jones Ratings (EJR)), I document that the coverage by EJR increases rated firm managers’ voluntary disclosure of negative news. Consistent with EJR’s rating coverage deterring managerial bad news hoarding by informing investors of downside risks, I find that the effect of EJR coverage is more pronounced when issuer-paid CRAs tend to assign inflated ratings and when rated firms’ managers have a stronger incentive to conceal bad news. I also document that firms unwind upward earnings management after being covered by EJR. In contrast, coverage by an issuer-paid CRA (Standard & Poor’s) is not associated with changes in managerial information disclosure. I conclude that investor-paid CRAs function as a type of effective information intermediary to discipline firm managers and improve corporate transparency. This paper was accepted by Brian Bushee, accounting. Funding: The author acknowledge financial support from the MOE Project of the Key Research Institute of Humanities and Social Science in University [Grants 22JJD790093 and 22JJD790094], the Program for Innovative Research Team of Shanghai University of Finance and Economics, and the 111 Project [Grant B18033]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2021.01914 .

Voluntary Disclosures and their Drivers: A Study of MDA Reports in India

The aim of this study is to examine the impact of corporate characteristics on voluntary disclosures of management discussion and analysis (MD&A) reports in India. Using a formal tone, the data was extracted from the annual reports of the top 100 listed firms available on the CMIE Prowess database for seven years (2016–2022). After excluding 23 companies from the financial and insurance sector, a panel regression method with the assistance of Gretl software was employed to investigate the relationship between the Management Discussion and Analysis Disclosure Index (MDADI) for voluntary aspects and various corporate attributes, with a total of 490 firm years of balanced observations. In India, firms follow the mandatory compliance of the MD&A reports, but voluntary disclosures are somehow those which are not much emphasized but are a good indication of firm performance and their accountability towards their stakeholders (Mayew et al., 2015). Our empirical findings reveal that profitability as a proxy to firm performance has a significant positive relationship with MD&A voluntary disclosures. Further, an insignificant association between VDS (Voluntary Disclosure Score) and the board size, presence of independent directors and firm size was found. This indicates that firm performance plays a significant role in adding more voluntary disclosures in MD&A reports. The possible reason for this could be the use of “Management Impression Strategy” in the MD&A reports, which means managers disclose more only when the firm has earned more and use impressive language to attract stakeholders. The outcomes of this research offer valuable insights for regulators, policymakers, and listed companies in India, aiding in the enhancement of MD&A reporting quality. Additionally, this study provides a roadmap for future research on MD&A reporting quality and corporate attributes in other emerging countries that have similar regulatory frameworks. This paper makes a timely and pertinent contribution to the scholarly discourse by shedding light on the relationship between MD&A disclosures and firm attributes. Its findings provide valuable insights for both academia and industry.

The politics of corporate social responsibility disclosure: Evidence from China

While businesses fluctuate with politics, firms try to find ways to deal with uncertainty. We investigate how political incentives shape corporate social responsibility (CSR) reporting activities using the setting of China. Based on a sample of non-mandatory CSR disclosure firms, we find that firms experiencing political turnover are more inclined to issue CSR reports voluntarily, supporting the political connection demand hypothesis rather than the political cost hypothesis. Such effects are more prominent when the political turnover is unexpected and successors are non-locals. Meanwhile, non-SOEs, not politically connected enterprises, and firms located in low government efficiency areas are more likely to issue CSR reports. Further analysis shows that these firms disclosed CSR information experiencing political turnover fail to ensure the reporting quality but can obtain resources in the future. Overall, we highlight that CSR disclosure is a way for firms to establish political connections with politicians. Our study sheds light on the determinants of voluntary CSR disclosure from a political perspective.

Reporting cybersecurity to stakeholders: A review of CSRD and the EU cyber legal framework

The purpose of this article is to explain, through a doctrinal review of the EU sustainability and cybersecurity legal framework, how the cybersecurity obligations contribute to the cybersecurity content and quality of the sustainability reporting. Previous studies are limited to voluntary cybersecurity disclosure in annual reports because they date back to before the adoption of CSRD. The CSRD harmonized sustainability reporting in the EU and introduced the ESRS, the standards for sustainability disclosure. As stated in the ESRS S4, the sustainability reporting should now address how the company manages the risks linked to data usage and data collection. Therefore, cybersecurity measures must be included in the sustainability report. This information can be used by stakeholders to assess the risk appetite and the potential long-term profitability of the company. The cybersecurity measures adopted by companies must comply with the cybersecurity obligations of the EU legal framework. While it is out of the scope of these cybersecurity obligations to inform ex ante the stakeholders of a company of how the company is managing cyber risks, these same obligations can improve the quality and content of the sustainability discourse.

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.

Integrated Reporting: A Literature Review

Background: Integrated Reporting (IR) is an innovative and effective reporting model combining financial and non-financial information into a single report. Purpose: This paper reviews the literature concerning Integrated Reporting related to voluntary disclosure. The study analyses the theoretical foundations of Integrated reporting. It discusses the main dimensions of the concept from the perspective of the company and other stakeholders, highlighting the importance of Integrated Reporting and integrated thinking in how the companies communicate. It aims to summon these points of view and achieve, through a systematic literature review, a clear depiction of voluntary disclosure using Integrated Reporting. Methods: A systematic literature review was performed using the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) methodology. Prisma is a framework of evidence-based elements designed to help authors conduct systematic literature reviews. Results: The results confirm the benefits a company can have when adopting quality integrated reporting. It promotes a long-term vision of corporate management, improves the diffusion of a culture of sustainability within the company, and promotes integrated thinking, an innovative strategic and cultural approach to corporate management. The limitations involved in adopting integrated reporting were also highlighted. Conclusion: This systematic literature review sought to consolidate knowledge on the subject. Opportunities for further empirical research in this area are suggested.

Pengaruh Implementasi Corporate Governance Terhadap Pengungkapan Sukarela (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia Periode 2017-2021)

The purpose of this study is to identify and analyze how much influence the implementation of Corporate Governance has on voluntary disclosure of manufacturing companies listed on the Indonesian Stock Exchange for the 2017-2021 period. There are four principles that must be applied so that the objectives of good corporate governance can be achieved, namely fairness, accountability, transparency and responsibility. Therefore, it is mandatory for all organs in the company to implement these principles, so in this research the author uses the variables independent board of commissioners, managerial ownership, and institutional ownership for voluntary disclosure. The population in this research is all manufacturing sector companies listed on the Indonesia Stock Exchange during the observation period, namely 2017-2021. The sample determination in this research was carried out using non-probability purposive judgment sampling, where the sample was determined based on certain criteria determined by the author and has limitations in terms of generalization. The results indicate that partially, the variables of independent board of commissioners and managerial ownership do not affect voluntary disclosure in the company's annual reports. However, institutional ownership variable significantly influences voluntary disclosure in the company's annual reports.

Analysis of Corporate Government Practices by Various Sectors in India : A Voluntary Disclosures from Annual Reports

Analysis of Corporate Government Practices by Various Sectors in India : A Voluntary Disclosures from Annual Reports

The role of internal audit, as one of the governance mechanisms, in improving the disclosure of social responsibility in the Sudanese banking sector.

The study aimed to show the importance of internal auditing and the extent of the interactive relationship between it in a way that improves voluntary disclosure of social responsibility. The researcher used the deductive approach in choosing the research problem and setting the scientific hypotheses, historical approach and also the statistics analysis that was dependable in the field study. The sample population of the study represented in accountants, financial reviewers and academics, the study concluded that the disclosure of audit reports and the degree of fluctuations to which the facility is exposed leads to predicting the extent of continuity of government agencies for their social responsibility. This study recommends the necessity of developing a guide for corporate governance mechanisms and standards in Sudan and developing and updating regulations and laws.

Revealed and reserved: a compensating approach of voluntary disclosure by family multinationals

Revealed and reserved: a compensating approach of voluntary disclosure by family multinationals

Does More Frequent Financial Reporting Bring the Future Forward?

SYNOPSIS Exploring mandatory financial reporting frequency changes in the United States from 1954 to 1972, we find that a mandatory increase in reporting frequency is associated with an increase in firms’ future earnings response coefficients. This effect is stronger for firms with higher sales seasonality or operating in industries with lower earnings persistence and for firms that provide more voluntary disclosures of forward-looking information after the reporting frequency increase. We also find that investors increase (decrease) the weight on long-term (near-term) earnings when pricing the firm after the reporting frequency increase. Our findings suggest that more frequent mandatory reporting can enhance the ability of investors to predict future earnings by providing additional useful information on future earnings and by triggering more voluntary disclosures. Our study informs the ongoing policy debates on mandatory financial reporting frequency by highlighting the informational benefit of frequent financial reporting for investors. Data Availability: Data are available from public sources identified in the paper. JEL Classifications: G14; M41; M48.

Formal vs. Informal Voluntary Disclosure Policies

Abstract Tax administrations have long grappled with the question of how noncompliant taxpayers should be allowed to correct their tax affairs voluntarily. While many jurisdictions have adopted various voluntary disclosure programs, several countries—including some of the world’s largest economies—have not done so. This Article examines the voluntary disclosure practices in twenty-five countries that do not have voluntary disclosure programs. It finds that the tax authorities in these jurisdictions frequently follow informal voluntary disclosure practices that operate as de facto substitutes for formal policies. In some countries, informal voluntary disclosure practices coexist alongside formal schemes. In light of these findings, this Article explores the tax policy considerations concerning the choice between formal and informal voluntary disclosure policies, and shows that formal schemes have several advantages over informal practices.

The Mediating Role of Corporate Governance in the Relationship between Net Profit and Equity and Voluntary Disclosure in the Context of Legitimacy Theory

The Mediating Role of Corporate Governance in the Relationship between Net Profit and Equity and Voluntary Disclosure in the Context of Legitimacy Theory

Criminal Protection of Public Personal Information in the Digital Era

The digital era has accelerated the speed and breadth of information dissemination. While enjoying the information dividend, the security of personal information has hidden dangers of leakage. For public personal information, this concern is even worse. On the theoretical level, the secondary authorization theory, the purposiveness theory, and the objective openness standard theory cannot fully respond to the reality and urgency of repeated violations of public personal information. On the level of judicial practices, the guiding cases of personal information protection issued by the Supreme People’s Court enlighten us that we should give classified protection to public personal information. Typed protection mode classifies the public personal information from the perspectives of voluntary disclosure, compulsory disclosure, and illegal disclosure, and considers whether it is convicted or not from three aspects: the subjective illegality of the doer, the scope of information control of the information subject and the measurement of public and private interests, which strengthens the protection of the public personal information.

Sustainable development goals disclosure and analyst forecast quality

PurposeThis study aims to investigate the relationship between corporate sustainable development goals (SDGs) disclosure and analyst forecast quality.Design/methodology/approachThe study focuses on a sample of 95 Italian-listed companies preparing the mandatory non-financial declaration (NFD) according to the Global Reporting Initiative (GRI) standards over a five-year period (2017–2021), corresponding to an unbalanced sample of 438 observations. Analyst forecast quality was proxied by earnings forecast accuracy (FA) and earnings forecast dispersion (FD), built on data retrieved from the Refinitiv database. A manual content analysis was performed on NFDs to derive an SDG disclosure score (SDGD) for each sampled company.FindingsThis study provides empirical evidence suggesting that voluntary SDG disclosure matters to the capital market in that it helps enhance the information environment of companies, evidenced by improved analyst forecast quality. In particular, this study highlighted that SDG disclosure positively influences analyst FA while negatively affecting analyst FD.Research limitations/implicationsThis study focuses on the Italian context, which has idiosyncratic characteristics regarding the structure of the financial market, the composition of corporate ownership and experience in non-financial reporting practices.Practical implicationsThis study indicates to corporate managers that following GRI standards may represent the right way to better integrate SDG disclosure in corporate non-financial reports and increase the relevance of such information for investors and other capital market participants.Originality/valueTo the best of the authors’ knowledge, this is the first study that empirically examines the association between SDG disclosure and analyst forecast quality.

Bargaining with Voluntary Disclosure and Endogenous Matching

We investigate a bargaining setting between an “informed” player, who has private information, and an “uninformed” player. The informed player has the option to truthfully disclose private information in two unique environments. In the first environment, the informed player is randomly matched with an uninformed player and, after matching, can voluntarily disclose private information prior to a negotiation taking place. In the second environment, the informed player can voluntarily disclose private information before any endogenous matching between players (and subsequent negotiation) takes place. We begin by examining these environments theoretically. When disclosure occurs after matching, we show that low informed types should disclose more often than high informed types to avoid disagreement. However, when disclosure occurs before matching, for a range of parameter values, we show that high informed types should disclose more than low informed types to secure a better match. We test these predictions in a controlled human-subjects experiment and verify many of the theoretical predictions. Among other results, we find that low informed types do indeed disclose their private information to avoid disagreement and that, when it is in their interest to do so, high informed types disclose their private information to secure a better match. Another key insight is that high uninformed types benefit from disclosure regardless of whether it occurs before or after matching. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03566 .

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.