Voluntary Financial Disclosure Research Articles

Unraveling the Dynamics: The Impact of Mandatory vs. Voluntary Financial Disclosure Practices on Investment Patterns

Financial disclosure practices play a crucial role in shaping investment patterns and decisions. This research paper delves into the intricate dynamics between mandatory and voluntary financial disclosure practices and their impact on investment behavior. Through a comprehensive review of literature and empirical evidence, this paper examines how different disclosure regimes influence investor confidence, market efficiency, and capital allocation. Furthermore, it explores the implications for regulatory frameworks and provides insights for policymakers, investors, and corporate entities navigating the complexities of financial disclosure

Adoption of International Financial Reporting Standards and Financial Performance of Listed Manufacturing Firms in Nigeria

This study reviewed the literature on the effect of the International Financial Reporting Standards (IFRS) adoption on financial performance of listed manufacturing firms in Nigeria. Forty-five journal articles on the subject published between 2012 and 2021 were analyzed. The study employed a narrative literature review. The review focused on determining whether there wre any significant differences between the financial performance measurements of listed manufacturing firms operating in Nigeria that were prepared using IFRS-compliant financial statements and local Generally Accepted Accounting Principles (GAAP). Second, to determine whether financial performance indicators developed using IFRS-compliant financial statements exhibit superior performance than those developed using local GAAP. The Studies reviewed employed secondary data, which were sourced from the annual reports of companies listed on the Nigerian Exchange Group, and the data were analyzed using panel regression analysis. According to the analysis of the literature, IFRS financial ratios are more accurate performance indicators than local GAAP financial ratios. Further investigation indicated that there were no notable discrepancies between the financial performance indicators (financial ratios) reported by listed manufacturing firms operating in Nigeria under local GAAP and IFRS-compliant financial statements. The study concluded that a company's financial performance (return on capital employed) improves in direct proportion to how closely it complies with IFRS disclosure guidelines. The study recommended that to sustain the positive effects of compulsory and voluntary financial performance disclosure, manufacturing firms should be concerned with the disclosure of important information at every point in time.

Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in Mergers and Acquisitions

Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in Mergers and Acquisitions

Chief Human Resource Officers and accounting disclosures: Illuminating the firm’s most important asset or window dressing?

Social activism, including movements towards equal pay, gender rights, and racial equality, has heightened public scrutiny, exerting pressure on firms to reassess and reform their human resource practices to ensure they align with current social and ethical norms. Chief Human Resource Officers (CHROs) have a potentially important role in defining and promoting appropriate human resource practices through human resource disclosures in corporate annual reports. We empirically examine the effect of CHROs on expanded human capital resource (HCR) disclosures, recently mandated by the SEC. We find that CHROs have a greater effect on the quality of HCR disclosures when they belong to the top management team, and less so when they belong to groups that are more poorly represented in top management, such as women, racial or ethnic minorities, or non-US nationals, and CHROs holding a liberal arts degree. Jointly considering the characteristics of CHROs, CEOs, and CFOs, we additionally find that pro-democratic political ideology is related to higher quality HCR disclosures. This study contributes to the literature by introducing a generalizable measure of HCR disclosure quality, uncovering significant heterogeneity in HCR disclosure quality across large US firms, and highlighting the role of CHROs in this process. In doing so, this study documents evidence that individual top executives in addition to the CEO and CFO can have a measurable effect on voluntary financial disclosures.

Impacto da realização de lives sobre o retorno das ações no mercado brasileiro

ABSTRACT The objective of this study was to investigate whether voluntary financial disclosure through live streaming can determine changes in shareholder returns in the Brazilian market. Corporate disclosure through social media is a new phenomenon, driven by the impacts of the coronavirus disease 2019 (COVID-19) pandemic, and its effects are investigated from the perspective that high levels of investor attention are associated with company engagement with audiences. The findings contribute to the literature on investor and firm behavior with respect to disclosure in non-traditional settings. The work is also relevant because it uses web scraping to process unstructured texts. The study provides elements for the development of voluntary disclosure theory, free of intermediaries and closer to retail investors. The traditional event study technique was used, based on live streaming data obtained through web scraping and text mining. The multivariate regression model was used for additional tests. It was found that live streaming have a positive impact on stock prices, although these effects are volatile and tend to return to previous averages within 5 days. Additional analyses also revealed that the greater the number of subscribers to the channel, if the Chief Executive Officer (CEO) participates, if the topic involves the discussion of results, and if the company is not listed in the Bovespa index (Ibovespa), the greater the chances of the content of the live streaming having an abnormal impact.

Voluntary disclosure quality, institutional ownership, and stock price volatility: Evidence from a frontier market

In this paper, we examine the impact of voluntary financial disclosure quality on the stock price volatility of non-financial firms quoted on the Tunis Stock Exchange. Empirically, we first test the impact of voluntary disclosure quality on stock price volatility. Then, we examine the combined effect of voluntary disclosure quality and institutional ownership on stock price volatility. We study a sample of 411 annual reports of non financial companies listed on the Tunisian stock exchange observed over the 2010–2019 period. The results show that voluntary disclosure quality has a negative impact on stock price volatility. Our results also show that the impact of voluntary disclosure quality on stock price volatility is still significantly negative even after incorporating institutional ownership into our empirical model to test the robustness of our results. Moreover, the positive impact of institutional ownership on stock price volatility is lessened by its indirect relationship with voluntary financial disclosure quality.

Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in M&A

Does Voluntary Financial Disclosure Matter? The Case of Fairness Opinions in M&A

A Narrative Analysis Using the Concept of Tabligh on the Obligation of Financial Statements Disclosure

Facts show that the rate of the disclosure financial statements by full-fledged sharia financecompaniesinIndonesiaisstillhighlylimited.Outofthreecompanies,onlyPT.Al Ijarah Indonesia Finance which give full and voluntary financial statements disclosure. This research aims to reveal the motivation of financial statements disclosure by full-fledged sharia finance companies using the concept of tabligh. This research uses theparadigmof tauhidandqualitativeapproach.Dataiscollectedbyintervieweingfour key informants from PT Al Ijarah Indonesia Finance to uncover motives and document study. Data is analyzed using Greimas’ structural narrative analysis and combined with the concept of tabligh. The results of the research show that the motive of financial statements disclosure by PT Al Ijarah Indonesia Finance is to communicate (tabligh) the financial statements to the stakeholders so that a broad and clear picture of the company is provided. Communicating (tabligh) informations broadly and clearly is what PT Al Ijarah Indonesia Finance aims for, which can be explained in several narrative relations; first, internal relations in which the constraints of ALIF internal disclosure become the consideration for the publication goodwill, which when combined with the concept of tabligh becomes the foundation of the disclosure. Second, the extent and content of the disclosure in the relation of subject and object as an informative disclosure, and when combined with the concept of tabligh becomes an extensive disclosure. The last relation is the disclosure media as the target of disclosure in the relation of sender and receiver, so that when combined with the concept of tabligh it becomes an effective act of communication.

The Moderating Role of Ownership Structure on the Relation between Board Independence and Voluntary Financial Disclosure: An Analysis of Italian Listed Company

The Moderating Role of Ownership Structure on the Relation between Board Independence and Voluntary Financial Disclosure: An Analysis of Italian Listed Company

Voluntary Financial Disclosure to Downward Stakeholders: An Empirical Examination of Chinese Nonprofits

Downward financial disclosure in the nonprofit sector is little scrutinized in the extant literature where most studies focus on financial disclosure “upward” to regulators, governing bodies, and donors. Analyzing a sample of 311 nonprofits collected in China, this article examines the determinants of nonprofits’ financial disclosure downward to their staff, beneficiaries, and the general public. The authors claim that in addition to the four sets of factors—organizational strategy, capacity, governance, and environment—organizational culture also affects nonprofits’ voluntary financial disclosure. In addition, there are different decision-making patterns of financial disclosure to the three downward stakeholders. While disclosure to staff is associated with strategy and internal governance, disclosure to beneficiaries is associated with internal governance, and disclosure to the general public is associated with strategy, capacity, and organizational culture.

The Impact of Voluntary Risk Management Disclosure, The Composition of the Board of Independent Commissioners Toward Firm Value on Indonesian Property ,Real Estate and Building Construction Companies

This study aims to examine the impact of voluntary disclosure of non financial risk management, and the composition of the board of independent commissioners toward firm value. The population of this study is the property, real estate and building construction sector companies listed on the Indonesia Stock Exchange (IDX) using Purposive Sampling. Data analysis method is multiple regression methods. The results of the study are voluntary non financial risk management disclosure has negatively significant impact to firm value while the composition of independent commissioners does not affect the value of the Company. Keywords: Voluntary risk management disclosures, composition of independent commissioners, Firm Value DOI : 10.7176/JESD/10-8-19 Publication date : April 30 th 2019

Corporate voluntary disclosures and board independence of Indian companies

Annual reports apart from being a means of communication are used as a vehicle of building and improving corporate image. Even the government and its institutions presiding over the corporate sector emphasize on additional disclosures related to corporate governance, corporate social responsibility, corporate sustainability etc. apart from more voluntary financial disclosures to enhance the investor confidence at large. There are a number of studies which argue, corporate governance and its mechanisms or proxies act as catalyst for increased voluntary disclosures while there are a few studies which negate or nullify its role in enhancing voluntary disclosures. Hence it is important at this juncture to find how it is currently placed in Indian context. The findings of this study suggest the lowering importance of proportion of independent directors in the boards of the companies. The variation in the extent of corporate disclosures over a longer period of time is not caused much due to board independence. However the role of board independence and its consistently positive association with voluntary financial and voluntary non-financial disclosures is an encouraging precursor for corporate firms and their varied stakeholders.

The Impact of Impending Credit Rating Change on Management Earnings Forecast

This study investigates whether impending credit rating changes affect managers’ voluntary financial disclosure behaviors. I find that firms near a credit rating change do not opportunistically alter their financial disclosure practices to manipulate rating agencies’ perceptions of corporate credit risk. In particular, firms close to a credit rating change do not selectively release good news or withhold bad news on their earnings information. Nor do the firms likely issue an optimistically biased forecast or a more precise forecast for good news than for bad news. Overall, there is no evidence suggesting that credit ratings are manipulated via management earnings forecasts.

Voluntary Disclosure of Sales and the Extent of Trade Credit in Small Private Companies

We examine the association between voluntary financial disclosure and the amount of obtained trade credit in a sample of small private Belgian companies. We argue that voluntary disclosure can help small private companies in mitigating information asymmetries that arise between the company and their suppliers. Using a propensity score matching procedure to control for selection bias, we find that voluntary financial disclosure by small and private companies is positively related to the level of trade credit. This is in line with the traditional view that asymmetric or incomplete information restricts access to external funds.

Hedge Fund Voluntary Disclosure

We study the contents and determinants of voluntary financial disclosures using a proprietary dataset of 3,234 letters sent by 434 hedge funds to their investors during the years 1995–2011. Contrary to the hedge fund industry’s reputation for public opacity, we document that hedge fund managers voluntarily disclose in their private investor letters a wide array of quantitative and qualitative information about fund returns, risk exposures, holdings, benchmarks, performance attribution and future prospects. We also find that variations in hedge fund disclosures across letters and over time are consistent with at least one prediction made by each of four theories of voluntary disclosure: proprietary costs, adverse selection and moral hazard, self-interested managers and regulatory pressure. We conclude that in an almost wholly unregulated setting, the voluntary quantitative and qualitative disclosures provided by managers to investors can be complex and reflect the interplay of multiple economic forces.

Voluntary Financial Disclosure on Social Media: Does Corporate Governance Matter?

In this study, we investigate whether corporate governance is a key determinant of a firm’s decision to disclose and disseminate financial information on a social media platform. We observe earnings-related disclosures on Twitter for a sample of UK FTSE 350 firms. We find that earnings disclosure is significantly associated with larger board size, greater gender diversity, and higher board effectiveness. Among the 127 disclosing firms, we find that board effectiveness is also significantly and positively associated with the extent of information dissemination. Overall, our findings suggest that firms with better governance mechanisms are more proactive in adopting social media as a complementary corporate disclosure channel. In particular, board effectiveness plays an important role in mitigating the information gap between management and investors through information dissemination on social media.

The Effect of Voluntary Financial Disclosures on the Stock Returns of Firms Quoted On the Nairobi Securities Exchange

Purpose: The main purpose of this study is to establish the effect of voluntary financial disclosures on the stock returns of companies listed at the Nairobi Securities Exchange.Methodology: The main purpose of this study is to establish the effect of voluntary financial disclosures on the stock returns of companies listed at the Nairobi Securities Exchange. This study used a descriptive study design. The population of the study was all the 61 firms listed at the NSE as at December 2013. The sampling technique was purposive or judgmental, as the study purposively chose the 20 companies consistently making up the NSE –20 share index between 2009 and 2013 (five years) because they are rich in information and are blue chip. The study used secondary data from the Capital Markets Authority (CMA). The selected period was year 2009 to year 2013 (5 years).The particular secondary data was extracted from financial statements of sample firms and from the Nairobi Securities Exchange handbook for the five years period of study, from 2009 to 2013.The researcher used frequencies, averages and percentages in this study. The researcher used Statistical Package for Social Sciences (SPSS) version 20 to generate the descriptive statistics, trend analysis and also to generate inferential results. A multivariate regression model was used to link the independent variables to the dependent.Results: The study findings indicated that corporate governance, corporate social responsibility, environment accounting, human resource accounting, financial services sector, divided pay out and firm size had a positive relationship with stock returns.Unique contribution to theory, practice and policy: The study recommended that firms should embrace voluntary financial disclosure as it posits them to many privileges/advantage. These advantages may include; easy access to external financing, securing a good name with governmental and non-governmental organizations, having a good public image. In addition, the study recommends that firms should ensure a balance of their debt to equity as increased debt is seen to cause a reduction on the stock returns.

Do firms change earnings management behavior after receiving financial forecast warnings?

This study investigates whether government-issued financial forecast warnings are associated with earnings management in Taiwan. In particular, we examine whether firms receiving warnings use different earnings management tools than firms without warnings. We find that firms that were warned prefer to use real activities manipulation than accrual-based earnings management to avoid potential litigation and penalties. In addition, we document that firms receiving warnings employed both accrual-based and real activities earnings management especially through over-production in response to the regulatory change from mandatory to voluntary disclosure in 2005. Our results suggest that while the government warning mechanism might constrain the forecasting firms from using accrual-based earnings management, the adoption of voluntary financial forecast disclosure did not necessarily prevent them from engaging in accrual-based manipulation.

Voluntary Disclosure of Sales and the Extent of Trade Credit in Small Young Private Companies

We examine the association between voluntary financial disclosure and the amount of obtained trade credit in a sample of small and young private Belgian companies. We argue that voluntary disclosure can help small private companies in mitigating information asymmetries that arise between the company and their suppliers. We focus on young companies because information asymmetries, and therefore finance constraints, are especially important in the early life of a company. We exploit a large and detailed database with information of more than 90,000 small private companies over the period 2010 till 2012. Our results indicate that voluntary financial disclosure by small and private companies is positively related to the level of trade credit, which is in line with the traditional view that asymmetric or incomplete information restricts access to external funds. In addition, we find that trade credit is negatively related to age, profitability, solvency, the level of total bank loans and tangible fixed assets and positively related to growth, the level of inventories and accounts receivable.

Ownership, corporate governance and mandatory tax disclosure influencing voluntary financial disclosure in Indonesia

This study examines the impact of ownership, corporate governance and mandatory tax disclosure on voluntary financial disclosure in Indonesia using 102 Indonesian listed companies in the period of 2009 to 2012, a total sample is 408 annual reports. The results show that proportion of independent director, managerial ownership, institutional ownership, foreign ownership and mandatory tax disclosure are assosiated with voluntary financial disclosure. Analysis reveals a moderate level of 59,90% score of disclosure in the period of 2009 to 2012 in Indonesian listed companies. Statistical analysis shows that the lowest disclosure score is in 2009 with the “Projected Information” as the subcategory of the disclosure. The highest voluntary financial disclosure is in 2012 with the “stock price information” as the subcategory of the disclosure. This study implies that ownership, corporate governance and mandatory tax disclosure are the key factors to explain communicating companies’ voluntary financial disclosures.