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Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide…

Abstract

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research. Prior research overwhelmingly supports that the IFRS adoption or effective implementation of IFRS will enhance high-quality financial reporting, transparency, enhance the country’s investment environment, and foreign direct investment (FDI) (Dayanandan, Donker, Ivanof, & Karahan, 2016; Gláserová, 2013; Muniandy & Ali, 2012). However, some researchers provide conflicting evidence that developing countries implementing IFRS are probably not going to encounter higher FDI inflows (Gheorghe, 2009; Lasmin, 2012). It has also been argued that the IFRS adoption decreases the management earnings in countries with high levels of financial disclosure. In general, the study indicates that the adoption of IFRS has improved the financial reporting quality. The common law countries have strong rules to protect investors, strict legal enforcement, and high levels of transparency of financial information. From the extensive structured review of literature using the Scopus database tool, the study reviewed 105 articles, and in particular, the topic-related 94 articles were analysed. All 94 articles were retrieved from a range of 59 journals. Most of the articles (77 of 94) were published 2010–2018. The top five journals based on the citations are Journal of Accounting Research (187 citations), Abacus (125 citations), European Accounting Review (107 citations), Journal of Accounting and Economics (78 citations), and Accounting and Business Research (66 citations). The most-cited authors are Daske, Hail, Leuz, and Verdi (2013); Daske and Gebhardt (2006); and Brüggemann, Hitz, and Sellhorn (2013). Surprisingly, 65 of 94 articles did not utilise the theory. In particular, four theories have been used frequently: agency theory (15), economic theory (5), signalling theory (2), and accounting theory (2). The study calls for future research on the theoretical implications and policy-related research on disclosure and transparency which may inform the local and international standard setters.

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International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

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Article
Publication date: 8 June 2020

Saoussen Boujelben and Chourouk Boujelben

The purpose of this paper is to examine the effect of the emotional attachment strength of family members to their business on the quality of the voluntary disclosure of…

Abstract

Purpose

The purpose of this paper is to examine the effect of the emotional attachment strength of family members to their business on the quality of the voluntary disclosure of their key performance indicator (KPI). More specifically, the authors focused on the effect of two dimensions of the socio-emotional theory, i.e. “family influence and control” and “firm dynasty succession.”

Design/methodology/approach

The authors performed a content analysis of annual reports for a sample of 87 French families listed in CAC All-Tradable to calculate a disclosure quality index of KPI. The authors proxied the “family influence and control” by the proportion of family members appointed in the board. To identify the “firm dynasty succession” concern, the authors classified firms according to the generation they belonged to. The authors estimated a cross-sectional linear regression model to meet the research objective.

Findings

This study confirms the role of the family affective attachment in decreasing the quality of KPI disclosure in such a way to preserve its socio-emotional wealth. The family firms’ principals who desire to sustain their control on the firm, to perpetuate the business for future generations and to protect their emotional wealth tend to avoid the disclosure of credible and reliable KPI information.

Practical implications

The findings have meaningful practical implications. First, they provide relevant insights into the regulatory bodies of the financial reporting regarding the increasing appeal for making KPI disclosure mandatory. Second, as the family businesses are the most widespread proprietorship in the French context, the effect of the family agenda on the quality of the KPI should be of interest to various policymakers and financial statements’ users of such firms. Third, the results inform nonfamily shareholders regarding the importance of selecting representatives on the board that should share similar interest with regard to KPI disclosure.

Social implications

From a societal perspective, this study is relevant in taking into account the critical role the family businesses have in the French economy. This study should help the minority shareholders to protect their interests and maximize their wealth within the family firm because it sheds light on the influence that family members have on hiding key information on the firm’s real performance.

Originality/value

To the best of the authors’ knowledge, no prior study in the family firms literature has examined the quality of voluntary disclosure of KPI. Although most previous studies merely compared family and nonfamily firms in terms of voluntary disclosure, the authors acknowledge and address the heterogeneity between family firms. The authors contribute to the few prior empirical validations of SEW implication on voluntary disclosure decisions by testing the effect of an additional dimension, which is family dynasty.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 3
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 22 November 2011

Florence Cavélius

Institutional investors use the information disclosed by listed companies to analyze the performance of their investments. The purpose of this paper is to open the “black…

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1333

Abstract

Purpose

Institutional investors use the information disclosed by listed companies to analyze the performance of their investments. The purpose of this paper is to open the “black box” of the construction of financial disclosure by analyzing the internal reporting systems of firms with reference to the information disclosed.

Design/methodology/approach

Using indexes, the quality of the financial disclosure and the internal reporting systems are measured, and analyzed with a view to finding some links between them. It is expected that the quality of disclosure is dependent on the quality of the internal reporting.

Findings

Complex interactions between internal reporting and financial disclosure are revealed, which leads to the identification of a typology of practices. The dependence of the relationship may be troubled by the willingness of the firm to communicate, or by the internal methods of control. According to the various cases, different levels of usefulness of the information for the investor are expected.

Originality/value

This paper is a first attempt to analyse information disclosed by firms with regards to the internal information at their disposal.

Details

Journal of Applied Accounting Research, vol. 12 no. 3
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 12 October 2015

Mary Low, Grant Samkin and Yuanyuan Li

– The purpose of this paper is to examine the quality of voluntary intellectual capital (IC) by universities in New Zealand, Australia, and the UK.

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1229

Abstract

Purpose

The purpose of this paper is to examine the quality of voluntary intellectual capital (IC) by universities in New Zealand, Australia, and the UK.

Design/methodology/approach

An IC framework was developed to measure IC reporting in the university sector. Content analysis was used to analyse the 2011 annual reports before a three-year comparative analysis of 90 universities (eight New Zealand universities, 38 Australian universities, and 44 UK universities) was undertaken.

Findings

New Zealand and Australian universities outperformed the UK universities in terms of IC disclosures. Additionally, the study found moderate increases in the levels of IC disclosures over the period of the study. The quality of IC disclosures by New Zealand universities was generally higher than their Australian and UK counterparts. Internal capital and human capital were the most disclosed categories with external capital being the least frequently disclosed in all three countries. However, the quality of external capital disclosures was higher than internal and human capital. Finally, most IC disclosures were narrative in nature.

Practical implications

The framework developed in this study could be adapted, further enhanced, and then applied to exploring IC disclosures in higher educational institutes in other jurisdictions.

Originality/value

This is the first comparative analysis of IC disclosures made by universities in three countries.

Details

Journal of Intellectual Capital, vol. 16 no. 4
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 2 May 2017

Si Jie Lim, Gregory White, Alina Lee and Yuni Yuningsih

This paper aims to measure mean voluntary intellectual capital disclosure (ICD) quality score for a sample of Australian Stock Exchange-listed biotechnology firms in the…

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1135

Abstract

Purpose

This paper aims to measure mean voluntary intellectual capital disclosure (ICD) quality score for a sample of Australian Stock Exchange-listed biotechnology firms in the 2003, 2006 and 2010 reporting periods. The aim was to use data for the same companies over the whole period to discover whether the quality of voluntary reporting practice was improving over time, measuring lagged-mean ICD quality score against possible determinants of management disclosure practice.

Design/methodology/approach

Mean ICD quality score, and associated frequency data, was measured against possible determinants of managers’ disclosure practice. The dependent variable was an 18-item classification of ICD based on Sveiby’s Intangible Assets Monitor (Sveiby, 1997). Data collected from S&P Capital IQ database were used to compare ICD disclosure quality with possible drivers: competition (capital intensity); performance (profit and market returns); monitoring (audit firm and ownership); and control variables (revenue and leverage).

Findings

Mean voluntary disclosures of internal capital and external capital lower the quality over time using paired sample t-test comparison against 2003 as a base year. The lowest quality disclosure was about human capital, and the highest quality was about internal capital. Individual disclosure items within internal, external and human capital classification showed that internal capital items (intellectual property, corporate culture, management processes and financial relations) and external capital item (customers) were the significant contributors. Investigation of drivers using Spearman’s correlation against lagged ICD data showed that performance (relative market returns) and monitoring (ownership diffusion) were significant drivers of voluntary ICD, both in expected and unexpected ways.

Originality/value

Voluntary ICD quality and quantity are rarely measured in the same paper. The findings are unique and interesting especially for innovative Australian R&D firms when compared to recent findings for a larger sample of French companies.

Details

Accounting Research Journal, vol. 30 no. 01
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 15 August 2016

Beatriz Cuadrado-Ballesteros, Isabel-Maria Garcia-Sanchez and Jennifer Martinez Ferrero

The purpose of this paper is to analyze empirically the fundamental role that information asymmetry plays in the functioning of an efficient capital market as mediator in…

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2333

Abstract

Purpose

The purpose of this paper is to analyze empirically the fundamental role that information asymmetry plays in the functioning of an efficient capital market as mediator in the relation between corporate disclosures and cost of capital.

Design/methodology/approach

By using a sample of 1,260 international non-financial listed companies in the period 2007-2014.

Findings

The findings suggest that high-quality financial and social disclosures quality reduce the cost of capital, by decreasing information asymmetry. In other words, the authors find evidence of the mediator role of information asymmetry in the relation between corporate disclosures and the cost of capital. These results are also controlled for differences on accounting standards and other institutional factors.

Originality/value

The central assumption is that the demand for corporate disclosures that reduces the information advantages of some investors (who are more informed) arises from agency conflicts and these information differences in turn, determine the cost of capital. This paper is the first attempt to study, jointly, the effects of decreasing information asymmetries by corporate disclosures on the cost of capital in an international setting. In addition, the authors focussed on both financial and social disclosures, creating empirical proxies whose validity for the analysis has been evidenced.

Details

Management Decision, vol. 54 no. 7
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 19 December 2018

Akrum Helfaya, Mark Whittington and Chandana Alawattage

The purpose of this paper is to provide a multidimensional model for assessing the quality of corporate environmental reporting (CER) incorporating both preparer- and…

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1595

Abstract

Purpose

The purpose of this paper is to provide a multidimensional model for assessing the quality of corporate environmental reporting (CER) incorporating both preparer- and user-based views.

Design/methodology/approach

As opposed to frequently used researcher-chosen proxies, the authors used an online questionnaire asking preparers and users how they assess the quality of a company’s environmental report.

Findings

The analysis of the responses of 177 users and 86 preparers shows that quantity was not perceived as the most significant element in determining quality. Besides quantity, the respondents also perceived information types, measures used, themes disclosed, adopting reporting guidelines, inclusion of assurance statement and the use of visual tools as significant dimensions/features of reporting quality.

Research limitations/implications

The online questionnaire has some limitations, especially in terms of researcher being absent to clarify meanings and, hence, possibilities that respondents may misinterpret the questionnaire elements.

Practical implications

Considering that robust, reliable measurement of reporting quality is difficult, preparers, standard setters and policy makers need multidimensional quality models that incorporate both users’ perceptions of quality and preparers’ pragmatic understanding of the quality delivery process. These will make the preparers informed of whether their disclosure may be falling short of users’ expectations.

Originality/value

Amid, increasing complexity of CER, the research contributes to the growing body of literature on assessing the quality of CER by developing a less subjective, multidimensional, preparer–user-based quality model. This innovative quality model goes beyond the traditional quality models, subjective author-based quality measures. Focussing on the three dimensions of reporting quality – content, credibility and communication – it also offers a high-level resolution of meaning of CER quality.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

Content available
Article
Publication date: 16 August 2019

Panayis Pitrakkos and Warren Maroun

This paper aims to examine the differences in quality and quantity of disclosures dealing with greenhouse gas emissions among companies with a relatively large or small…

Abstract

Purpose

This paper aims to examine the differences in quality and quantity of disclosures dealing with greenhouse gas emissions among companies with a relatively large or small carbon footprint. It also considers whether disclosures are being included in the primary report to stakeholders (an integrated report) or in a secondary source (a sustainability report).

Design/methodology/approach

A comprehensive carbon disclosure checklist was constructed based on professional and academic literature to identify and categorise carbon disclosures. Quality is gauged according to a multi-dimensional assessment derived from prior research based on density of reporting, disclosure attributes, management orientation, integration of information, ease of analysis, reporting on strategy, use of independent assurance and repetition. A content analysis is used to gauge the quantity and quality of carbon disclosures of 50 companies listed on the Johannesburg Stock Exchange. Differences in the quantity and quality scores of high- and low-carbon companies are tested using a Mann–Whitney U test.

Findings

Carbon disclosures are used as part of a legitimacy management exercise. This involves not just the use of additional environmental disclosure to placate stakeholders as environmental impact grows. The quality of reporting and location of disclosures are, perhaps, more important for understanding how companies are responding to stakeholder expectations for reporting on carbon emissions and climate change.

Practical implications

Despite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.

Social implications

Despite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.

Originality/value

The study merges the traditional approach of focusing on the quantity of disclosures to illustrate the application of legitimacy theory in a sustainability/integrated reporting setting with less-seldom-studied quality and location of reporting. This result provides a more nuanced perspective of how carbon disclosures are being used to manage stakeholders’ reporting expectations.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 3
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 19 June 2019

Anup Kumar Saha, Bipasha Saha, Tonmoy Choudhury and Ferry Jie

This study aims to investigate the relationship between the quality and volume of carbon emission disclosures (CED) in UK higher educational institutions (HEIs), with an…

Abstract

Purpose

This study aims to investigate the relationship between the quality and volume of carbon emission disclosures (CED) in UK higher educational institutions (HEIs), with an emphasis on the impact of the Higher Education Funding Council of England (HEFCE) carbon reduction target on such disclosures.

Design/methodology/approach

Based on stewardship theory, this study explores the decision usefulness of the CED by HEIs, i.e. whether a larger volume of CED means that it is more useful to readers and stakeholders. A framework was developed to measure the CED quality. The relationships between CED volume and quality were examined using the ordered probit regression model.

Findings

CED volume in annual reports and HEFCE carbon reduction target were found to have a significant positive impact on CED quality. There exists a void in research with carbon disclosures by HEIs, an area which has been widely researched with regard to profit-seeking organisations. The study adds to the earlier related studies by its contribution about HEIs to the disclosure literature.

Research limitations/implications

The study is distinct in investigating the relationship between volume and quality of CED by HEIs. However, the impact of CED would need to be clear to motivate the HEIs to engage in such disclosure. Thus, future studies should investigate the impact of both volume and quality of CED on reputation.

Originality/value

The study recognises that the characteristics of HEIs are distinct from profit-seeking organisations, which have been widely researched in literature. Generalising the research studies on profit-oriented companies for the most publicly funded UK HEIs may mislead any outcome. This study is distinct from the reader’s point of view in exploring whether more CED is more useful in better decision-making.

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Article
Publication date: 13 February 2017

Habiba Al-Shaer, Aly Salama and Steven Toms

The purpose of this paper is to examine the determinants of the volume of environmental disclosures and their quality, with particular focus on the role of audit…

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3351

Abstract

Purpose

The purpose of this paper is to examine the determinants of the volume of environmental disclosures and their quality, with particular focus on the role of audit committees (ACs) and the effects of the Smith report recommendations for the UK Corporate Governance Code.

Design/methodology/approach

Quantitative large sample analysis of UK FTSE350 companies for the period 2007-2011.

Findings

Firms with higher quality ACs make higher quality disclosures. Larger firms with block shareholders have greater volume of disclosures, whilst AC quality does not increase disclosure volume.

Research limitations/implications

Findings are based on evidence from single country and imply further international comparative research.

Practical implications

ACs mitigate the requirement for prescriptive legislation on narrative accounting disclosures relating to environmental issues.

Originality/value

The paper contributes to research that has examined the relationship between corporate governance mechanisms, specifically ACs, and the quality of financial reporting by considering voluntary narrative disclosures on environmental matters.

Details

Journal of Applied Accounting Research, vol. 18 no. 1
Type: Research Article
ISSN: 0967-5426

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