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Article
Publication date: 1 February 2001

Jill Hooks, David Coy and Howard Davey

Corporatisation of the New Zealand electricity industry during the 1990s increased the need for improved accountability. The publication of annual reports is one of the…

Abstract

Corporatisation of the New Zealand electricity industry during the 1990s increased the need for improved accountability. The publication of annual reports is one of the prime ways in which organisations meet their accountability obligations. This paper describes the development of a disclosure index from a public accountability perspective and reports the results of its application to the 1999 annual reports of the 33 electricity retail and distribution companies. The index was developed with the support of a panel representing 15 stakeholder groups. It is designed to assess the comprehensiveness (both in extent and quality) of annual report disclosures and incorporates a best‐practice model of annual reporting. Key areas of inadequate disclosure relate to performance measures (financial and non‐financial), segmental information, asset valuation details, and the cost of electricity purchased / generated. Improved disclosure to meet best‐practice guidelines would contribute to improved communication between companies and stakeholders.

Details

Pacific Accounting Review, vol. 13 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 14 December 2020

Harun Sencal and Mehmet Asutay

As an essential component of Islamic governance for ensuring religious compliance, Shari’ah annual reports (SARs) play an important role in providing communication between…

Abstract

Purpose

As an essential component of Islamic governance for ensuring religious compliance, Shari’ah annual reports (SARs) play an important role in providing communication between Shari’ah board (SB) members and stakeholders. This paper aims to determine the ethical disclosure in SARs to identify how close the Shari’ah disclosure to the standards set by AAOIFI and also substantive morality of Islam. The research also aims to examine the factors determining disclosure performance.

Design/methodology/approach

Two disclosure indices are developed to generate data from the SARs: the AAOIFI standards for Shari’ah governance index for form related approach, an Islamic ethicality augmented index reflecting on substantive morality approach. The sample consists of 41 Islamic banks from 15 different countries for the period of 2007–2014. Sampled 305 SARs were examined through disclosure analysis in line with the two indices developed for this study. The econometric analysis was run to identify the factors determining disclosure performance.

Findings

The findings suggest that AAOIFI guidelines have an influence on the level of disclosure, even if Islamic banks have not adopted them. However, the level of disclosure for the ethically augmented index is found to be very limited with reliance on general statements in most of the cases. As part of determining factors, the popularity of Shari’ah scholars is significant for both indices, while the existence of an internal Shari’ah auditing department holds some explanatory power. The adoption of AAOIFI standards at the country level, the regulatory quality and the duration of Sharīʿah-compliance are particularly deterministic factors in terms of complying with AAOIFI standards for SARs.

Originality/value

Although SB is the most crucial division of corporate governance in Islamic banks in terms of securing the “Islamic” identity of these institutions, their most important communication instrument, namely, SAR, has not been explored sufficiently, alongside an insufficient attempt to constitute Islamic corporate governance. Initially, this study attempted to constitute an Islamic corporate governance framework as a theoretical construct, which provides context for the empirical part of the research and this should be considered a novel approach. Second, the empirical part of the research aims to fill the gap observed in the literature such as small sample size and index construction-related matters. This research is conducted with a larger sample size as compared to the available studies in the literature and it has developed two indices for disclosure analysis along with developing an Islamic morality-based index beside an index based on AAOIFI standards.

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 1
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 29 June 2012

Mostafa Kamal Hassan

The purpose of this paper is to examine the extent of corporate governance reporting by United Arab Emirates (UAE) listed corporations.

Abstract

Purpose

The purpose of this paper is to examine the extent of corporate governance reporting by United Arab Emirates (UAE) listed corporations.

Design/methodology/approach

The paper reports on the study of annual reports of 95 UAE listed corporations representing the major economic sectors (banking, insurance, industrial and service) in the country while crafting a corporate governance reporting index that not only advocates the voluntary publication of corporate governance information but also stresses its underlying ethos of public accountability and transparency.

Findings

Overall, the extent of governance disclosure is found to be similar across the major economic sectors in the UAE. The lowest disclosures are associated with information about external auditing and non‐audit services. The highest disclosures are those dealing with management structure and transparency, which are also found to be significantly different across the sectors in the UAE.

Research limitations/implications

The study examines the corporations' annual reports, as this is the only vehicle in which corporate governance information is disclosed. Future research is recommended to include other disclosure channels such as press releases, corporations' websites, and online reporting.

Practical implications

The findings of this study can assist UAE regulators in formulating corporate governance disclosure requirements. The findings also provide the international business community insights concerning the extent of corporate governance reporting in the UAE.

Originality/value

The crafted corporate governance reporting index not only adds a quantitative dimension advocating the voluntary publication of governance information but also considers the socio‐political context in the UAE.

Details

Journal of Financial Reporting and Accounting, vol. 10 no. 1
Type: Research Article
ISSN: 1985-2517

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Book part
Publication date: 3 September 2014

Rodrigo de Souza Gonçalves, Otávio Ribeiro de Medeiros, Elionor Farah Jreige Weffort and Jorge Katsumi Niyama

This study is aimed at developing and validating an index designed to measure the level of social disclosure of external social programs of firms listed on the Brazilian…

Abstract

Purpose

This study is aimed at developing and validating an index designed to measure the level of social disclosure of external social programs of firms listed on the Brazilian stock market.

Methodology/Approach

The index of social disclosure is composed of 13 items distributed in three dimensions: past information, prospective actions, and accessibility. Its validation involved: (a) pre-test, (b) analysis by referees, (c) exploratory factor analysis, (d) Cronbach’s alpha test, and (e) final validation. The sample is composed of 83 Brazilian firms listed on the Brazilian Stock Exchange from 2005 to 2009.

Findings

The index presented robustness in all validation stages. It was found that size, industry sector, internationalization, auditing, and listing on social responsible investment funds are decisive factors for increasing the level of social disclosure.

Research Limitations

The index of social disclosure evaluates external social programs only. Hence, some types of social information are not captured, such environmental ones. Besides, the sources of information for the index are restricted to annual and sustainability reports, so that information from other sources, such as official announcements and company websites, are not captured.

Social Implications

The social disclosure index developed can be useful to analysts and investors assessing listed firms, as well as to financial-market regulators defining policies applicable to the disclosure of corporate social information.

Originality/Value

(a) Construction of a social disclosure index validated and tested in Brazilian firms, which is liable to replication; (b) Utilization of a representative sample of firms listed on an important emerging stock market.

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Article
Publication date: 12 March 2018

Lakhwinder Singh Kang and Payal Nanda

This study aims to analyse the impact of company performance, company size, ownership structure, board characteristics and other company characteristics on the disclosure

Abstract

Purpose

This study aims to analyse the impact of company performance, company size, ownership structure, board characteristics and other company characteristics on the disclosure of managerial remuneration in 134 listed companies in India from the year 2003 to 2012.

Design/methodology/approach

A disclosure and compliance index is developed on the basis of 14 statements prepared regarding the disclosure of managerial remuneration in corporate governance reports of companies. The Papke and Wooldridge (2008) approach is adopted to estimate fractional response models, and fractional probit model is estimated using the generalised estimating equation approach, with an independent working correlation matrix to determine the effect of various company attributes on managerial remuneration disclosure.

Findings

The study shows that company size and the presence of remuneration committee are significantly related with the disclosure and compliance index of managerial remuneration. Remuneration disclosure is found to be time-dependent as time dummies for all years are found to be significant.

Research limitations/implications

This study highlights the importance of the formation of remuneration committees on corporate boards. The findings of the present study can be used as inputs for promoting better compliance and comprehensive executive remuneration disclosure.

Originality/value

Nothing concrete in the field of managerial remuneration disclosure (to the best of researcher’s knowledge) has yet been done in an emerging economy such as India. This study aims to address this gap by deriving a disclosure and compliance index for managerial remuneration disclosure and examining the impact of various corporate attributes on it.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 1 April 2004

Abdulrahman Al‐Razeen and Yusuf Karbhari

This study investigates the interaction between the compulsory and voluntary disclosures in the annual reports of Saudi Arabian companies. The sample comprises both listed…

Abstract

This study investigates the interaction between the compulsory and voluntary disclosures in the annual reports of Saudi Arabian companies. The sample comprises both listed and non‐listed companies. The data were analyzed by constructing three separate disclosure indices relating to mandatory disclosure, voluntary disclosure that closely relates to mandatory disclosure and voluntary disclosure that is not closely related to mandatory disclosure. The results reveal that there is a significant, positive correlation between mandatory disclosure and voluntary disclosure related to the mandatory disclosure index. The study also reports a correlation between voluntary disclosure and the other two indices is found to be weak and insignificant. These weak relationships suggest an absence of effective co‐ordination between the parties involved in preparing the annual report. The analysis also reveals no clear pattern of relationships to exist between mandatory disclosure and the types of disclosure in the different industrial sectors examined in this study. The non‐correlation between these groups of disclosure may suggest low co‐ordination between the board of directors and the management in writing parts of the annual report.

Details

Managerial Auditing Journal, vol. 19 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 February 2021

Esam Shehadeh, Doaa Aly and Ibrahim Yousef

The purpose of this study is to analyse the level of online disclosure of firms in the USA and to evaluate the impact of diversity in terms of director nationality…

Abstract

Purpose

The purpose of this study is to analyse the level of online disclosure of firms in the USA and to evaluate the impact of diversity in terms of director nationality (boardroom internationalisation) on online disclosure.

Design/methodology/approach

The authors apply, for the first time, a new modified scoring system to measure online disclosure levels by securing more detailed information on each of the items in the voluntary disclosure index. Regarding the percentage of foreign board members, unlike in previous research, the authors calculate two additional proxies to more accurately specify the level of international diversity on the board: the Blau Index and the Shannon Index. Moreover, the authors use a cross-sectional model for the sampled non-financial S&P500 firms using both ordinary least squares (OLS) and heteroskedasticity-corrected estimates to analyse the impact of boardroom internationalisation on the level of online disclosure.

Findings

The findings reveal that the average online disclosure level for the sample in question is 64% for the 0–1 index and 57% for the 0–4 index. In addition, the results of the regression analysis confirm the study’s proposed hypothesis, which is that the presence of international board members correlates with an improvement in the level of online disclosure. This can be attributed to the fact that foreign directors bring unique skills and knowledge from their home countries and thus, increase board discussion, creativity and innovation, which has a positive impact on the level of online disclosure.

Research limitations/implications

Financial firms are subject to capital requirement regulations; consequently, disclosure practices can be influenced. Therefore, these firms were excluded from the sample of the study.

Originality/value

This research contributes to the body of literature on nationality diversity of firm boards and corporate online disclosure in several respects. Firstly, the study adds an international dimension to the existing literature. Secondly, this study provides new evidence that foreign diversity on the board can improve firm value, insofar as the corresponding enhancement of online disclosure leading to positive capital market implications. Thirdly, the authors use, for the first time, a new scoring system approach to measure the level of online disclosure. Finally, it contributes to the corporate governance literature by basing its analysis on a multi-theoretical approach.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 3 August 2015

Monica Singhania and Gagan Gandhi

The purpose of this paper is to construct the social and environmental disclosure index for Indian companies in order to examine the relationship between social and…

Abstract

Purpose

The purpose of this paper is to construct the social and environmental disclosure index for Indian companies in order to examine the relationship between social and environmental disclosure and select corporate attributes.

Design/methodology/approach

The sample covers annual reports of companies for financial year 2011-2012. The sample represents both financial and non-financial companies that constitute Nifty 50 Index companies as on March 31, 2012. The actual size of the sample analyzed represented 41 companies. The unweighted disclosure index approach has been used to measure the extent of disclosure of social and environmental information where an item scores 1 if disclosed and 0 if not disclosed. The authors built a model using regression which indicates the variables that are significant in determining the social and environmental disclosure of a company. The regression model can be used to predict the degree of disclosure of a company given the values of explanatory variables. Content analysis from annual reports of the companies has been used in constructing the dependent variable.

Findings

Regression results indicate that location (place where the registered office of company is located), number of operations of company, turnover, sales and administration expenses, age of company, employee cost and interest paid by company are significant in determining the disclosure index of the company.

Research limitations/implications

Sample size can be increased by considering more companies. In addition, a longitudinal study would enable in drawing comparison over a period of time with respect to disclosure index. The increased sample size would help in validating the disclosure score by dividing the data set into two: one as observation window and the other as validation window.The model explains 23 percent variation in disclosure index. More variation may be explained by incorporating more explanatory variables in the model.

Practical implications

The authors indicate the level of disclosure in case of Indian companies which may prove to be an indicator for prospective investors especially in the present era of global financial and economic downturn. The paper may assist the regulators in framing policies regarding corporate governance. This will enable the regulators of corporate sector to frame laws in order to predict the degree of disclosure of a company based on certain explanatory variables.

Originality/value

The authors focus especially on Indian companies for constructing the disclosure index which to the best of knowledge has not been attempted till date.

Details

Journal of Advances in Management Research, vol. 12 no. 2
Type: Research Article
ISSN: 0972-7981

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Article
Publication date: 4 September 2020

Martha Coleman and Mengyun Wu

This study investigates the impact of corporate governance (CG) mechanisms with inclusion of compliance and diligence index on corporate performance (CP) of firms in…

Abstract

Purpose

This study investigates the impact of corporate governance (CG) mechanisms with inclusion of compliance and diligence index on corporate performance (CP) of firms in Nigeria and Ghana. It further examines the moderating effect of financial distress on the relationship between CG and CP.

Design/methodology/approach

The study used panel data of 102 nonfinancial listed firms of Nigeria and Ghana stock exchange for the period 2012–2016 with total observation of 510. The study first used OLS in estimating the influence of CG mechanisms on CP. Due to multicollinearity in the independent variables, ridge regression was employed.

Findings

It was revealed that ownership structure index and board compliance and diligence index, board size, board disclosure, ownership structure, shareholders' right and board compliance and diligence index had positive influence on ROA and ROE. Growth of Tobin's Q depends on board procedure and board compliance and diligence index. Also, financial distress (ZFS) negatively moderates the relationship between board structure index, board disclosure index, board procedure index, shareholders' right and performance (ROA and ROE) but negatively moderates between ownership structure index and Tobin's Q.

Practical implications

This study provides interesting findings to policymakers in full implementation of CG codes as stated by OCED (2015) by West African firms with greater emphasis on compliance and diligence index since it positively influences all CP measures.

Originality/value

The study provides evidence of the importance of the introduction of the new index: compliance and diligence, which looks at disclosure of CSR activities. This has been overlooked by most researchers especially in Africa in assessing quality CG mechanisms.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 17 January 2020

Samreen Hamid, Zahid Riaz and Syed Muhammad Waqar Azeem

This study aims to ascertain the relevance of Carroll’s four dimensions of corporate social responsibility (CSR), namely, economic, legal, ethical and discretionary in a…

Abstract

Purpose

This study aims to ascertain the relevance of Carroll’s four dimensions of corporate social responsibility (CSR), namely, economic, legal, ethical and discretionary in a dynamic regulatory context of a developing economy – Pakistan.

Design/methodology/approach

This study has operationalized these dimensions as four categories of CSR disclosure index. This disclosure index measured the relevance of CSR dimensions by examining CSR disclosure practices of Pakistan Stock Exchange-100 index firms.

Findings

The authors have found that the firms of Pakistan disclose more information pertaining to discretionary dimension of CSR than economic, legal and ethical dimensions. Interestingly, the authors have observed that after the enactment of state regulation, there is an increasing trend of the overall CSR disclosure level at a decreasing rate.

Practical implications

For policymakers, these findings imply that firms tend to perceive law as a box-ticking exercise and refrain to involve in those CSR activities that can have both strategic and societal benefits over the long run. These finding imply for business managers that if they will not undertake CSR notion seriously then the policymakers will take statutory initiatives to curtail the greenwashing effect and these initiatives can lead to higher transaction costs.

Originality/value

This study presents evidence about the relevance of Carroll’s four dimensions of CSR in a developing economy. The evidence shows that the CSR disclosure in developing economy continues to take a largely philanthropic form thereby dominating other CSR dimensions namely ethical, legal and economic. These findings also confirm that CSR practices are context-dependent and these cannot be isolated from their unique social context.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

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