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Article
Publication date: 6 June 2016

Mariateresa Torchia and Andrea Calabrò

The purpose of this paper is to examine the link between board of directors’ composition (independent directors’ ratio, board size, CEO-duality) and financial transparency…

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2016

Abstract

Purpose

The purpose of this paper is to examine the link between board of directors’ composition (independent directors’ ratio, board size, CEO-duality) and financial transparency and disclosure (T&D).

Design/methodology/approach

The paper analyzes board composition and financial T&D of Italian listed companies using multiple linear regression analysis.

Findings

The results of this paper show a significant link between board composition and the level of financial T&D. In particular, the authors found a positive and significant relationship between the independent directors’ ratio and the level of financial T&D and a negative relationship between board size and the level of financial T&D.

Research limitations/implications

While this paper focuses on a sample of 100 Italian listed companies, the authors acknowledge the importance of extending the results to other national context and to other type of firms (e.g. non-listed firms or SMEs). Moreover, while this paper concerns the amount of information disclosed by firms, it does not look at the quality or accuracy of disclosure.

Practical implications

This paper reveals the importance of evaluating the effectiveness of corporate governance mechanisms (such as board composition) in enhancing the level of financial T&D. Indeed, the authors provide some indications to firms to improve their internal governance mechanisms (e.g. the importance of high proportion of independent directors and of small- and medium-sized boards of directors).

Originality/value

This paper provides interesting insights to firms which are under pressure to improve the level of information to stakeholders. Moreover, has the level of information that is not legally required vary among companies and countries, the authors shed light on a context characterized by high level of ownership concentration, where firms can experience different types of conflict of interests.

Details

Corporate Governance, vol. 16 no. 3
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 14 November 2016

Ali Ahmadi and Abdelfettah Bouri

This research paper aims to identify and measure the contribution of the financial safety act (FSA) regulation in improving the level of financial disclosure of listed…

Abstract

Purpose

This research paper aims to identify and measure the contribution of the financial safety act (FSA) regulation in improving the level of financial disclosure of listed Tunisian firms. To answer the problems of the subject, the authors tried to hold accountable several determinants of the level of financial disclosure relating to the particular characteristics of the firm, and the adoption of the recommendations envisaged by the FSA, as likely to have an impact on the level of financial disclosure of Tunisian firms.

Design/methodology/approach

With a sample composed by 20 companies during the period from 2003 to 2010 (160 observations), the contribution of the FSA regulation in improving the level of financial disclosure of listed Tunisian firms was identified and measured. After that, the levels of financial disclosure before and after the FSA were compared.

Findings

The study results confirm the positive and significant effect of the FSA on the level of financial disclosure. This impact seems to appear through the improvement of the disclosure level during the years which follow the adoption of the new regulation. The results of this study also show that firms with a high level of financial disclosure are those which have an independent board of directors, auditor BIG and joint audit.

Originality/value

This paper is devoted to evaluate the impact of the FSA n°2005-96 and corporate governance on the level of financial disclosure. The empirical study relates to a sample of 20 firms listed on the Tunis Stock Exchange observed over the period 2003-2010.

Details

International Journal of Law and Management, vol. 58 no. 6
Type: Research Article
ISSN: 1754-243X

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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.

Details

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

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Book part
Publication date: 8 September 2017

Sherif El-Halaby, Khaled Hussainey and Abdullah Al-Maghzom

The authors measure the impact of culture on Sharia; Social and Financial Disclosure (SSFD) of Islamic Banks (IBs) around the world.Content analysis is used to measure…

Abstract

The authors measure the impact of culture on Sharia; Social and Financial Disclosure (SSFD) of Islamic Banks (IBs) around the world.

Content analysis is used to measure levels of disclosure for a sample of 136 IBs of 25 countries for years 2013 and 2014. Different cultural measures are used. These include secrecy/transparency as suggested by Gray (1988) and Hofstede (1980, 1983, 2001, 2010)’s culture dimensions which include: Power Distance; Individualism; Masculinity; Uncertainty Avoidance; Long-Term Ordination and Indulgence. Ordinary least square (OLS) regression is used to test the research hypotheses.

After controlling bank-specific, corporate governance and country characteristics, the authors found that Hofstede’s culture dimensions have a significant impact on SSFD. They also found that Gray's transparency dimension positively influence levels of sharia, social and aggregated disclosure. Therefore, they conclude that culture influences levels of disclosure in IBs.

This study has policy implications for managers and regulators of Islamic banking industry.

This study is the first to use both Gray and Hofstede models in the context of IBs around the world. It also the first to explore the impact of culture on three different disclosure levels for IBs.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78714-527-6

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Article
Publication date: 26 August 2014

Shakil Quayes and Tanweer Hasan

– The purpose of this paper is to analyze the relationship between financial disclosure and the financial performance of microfinance institutions (MFIs).

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1868

Abstract

Purpose

The purpose of this paper is to analyze the relationship between financial disclosure and the financial performance of microfinance institutions (MFIs).

Design/methodology/approach

The paper utilizes ordinary least squares method to analyze the impact of disclosure on financial performance, an ordered probit model to investigate the possible effect of financial performance on disclosure and utilizes a three-stage least squares method to delineate the endogenous relationship between disclosure and financial performance of MFIs.

Findings

The paper finds that better disclosure has a statistically significant positive impact on operational performance of MFIs; second, it also shows that improved financial performance results in better financial disclosure. Keeping the endogenous nature of the relationship between disclosure and performance, the paper uses a three-stage least squares method to show that disclosure and financial performance positively affect each other simultaneously.

Research limitations/implications

The paper attempts to delineate a positive association between better disclosure on financial performance of MFIs, which can be used for developing a better disclosure policy by management, formulating more effective guidelines for disclosure by the stakeholders and mandating more appropriate laws and uniform disclosure practice by regulators.

Originality/value

This is the first study that uses a large number of MFIs from 75 countries; second, it uses a uniform scale of designating a disclosure rating (assigned by MIX Market) to show the relationship between disclosure and performance. Finally, it uses three-stage least squares method to address the possible endogeneity between disclosure and performance.

Details

Journal of Accounting & Organizational Change, vol. 10 no. 3
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 18 April 2016

Sherif El-Halaby and Khaled Hussainey

The authors explore the level and determinants of compliance with Accounting and Auditing Organization for Islamic Financial Institution’s (AAOIFI) financial and…

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1841

Abstract

Purpose

The authors explore the level and determinants of compliance with Accounting and Auditing Organization for Islamic Financial Institution’s (AAOIFI) financial and governance standards by Islamic banks (IBs).

Design/methodology/approach

The sample consists of 43 IBs across eight countries. The authors use ordinary least squares regression analyses to examine the impact of bank-specific characteristics and corporate governance (CG) mechanisms concerned with Board of Directors (BOD) and Sharia Supervisory Board (SSB) on the levels of compliance with AAOIFI standards.

Findings

The paper finds that the average compliance level based on AAOIFI standards concerning the SSB is 68 per cent; corporate social responsibility (CSR) is 27 per cent; and presentation of financial statements (FSs) is 73 per cent. The aggregate disclosure based on the three indices is 56 per cent. The analysis also shows that size, existing Sharia-auditing department, age and CG of SSB are the main determinants of compliance levels.

Originality/value

The determinants of compliance with AAOIFI standards for IBs around the world have not been explored before, and therefore, this paper is the first of its kind to this issue.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 9 no. 1
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 1 September 2006

Per Flöstrand and Niklas Ström

Research has called for increased relevance of business reporting. A step towards that goal is an increased disclosure of non‐financial information. At the present time…

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4809

Abstract

Purpose

Research has called for increased relevance of business reporting. A step towards that goal is an increased disclosure of non‐financial information. At the present time, non‐financial information is mostly provided on a voluntary basis.

Design/methodology/approach

Valuation relevance of non‐financial information is studied by examining the information content of 200 analyst reports written on a respective number of firms listed in the S&P 500 index, while simultaneously performing a disclosure study of non‐financial information by the same 200 firms in their annual reports.

Findings

We found the valuation relevance of non‐financial information to be related to the size of the target firm. Further, analysts’ use of non‐financial information is related to the level of non‐financial information in the 10‐k report of the target firm. Finally, analysts tend to rely more heavily on forward‐looking non‐financial information than on historical non‐financial information.

Practical implications

The findings in this paper have implications for policy makers, preparers of business reporting, and others having to make judgments on information usefulness.

Originality/value

This study looks at the valuation relevance of non‐financial information, as opposed to earlier studies that have judged the usefulness of non‐financial information by measuring its value relevance. Information is regarded to have valuation relevance if it is used by analysts in the valuation process. Hence, valuation relevance offers an alternative way of measuring information usefulness.

Details

Management Research News, vol. 29 no. 9
Type: Research Article
ISSN: 0140-9174

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Article
Publication date: 30 September 2020

Sameh Mekaoui, Emna Brahem and Hanen Moalla

This study aims to investigate, on the one hand, the impact of the Tunisian Revolution and internal governance mechanisms (especially, the ownership structure and the…

Abstract

Purpose

This study aims to investigate, on the one hand, the impact of the Tunisian Revolution and internal governance mechanisms (especially, the ownership structure and the board of directors structure on the extent of voluntary information disclosure [VID]) and on the other hand, the moderating effect of the Tunisian Revolution on the relationship between the internal corporate governance mechanisms and the VID.

Design/methodology/approach

A content analysis of 362 annual reports is used for determining the level of VID. This study covers a 10-year period (2007-2016) which is divided into two sub-periods (before and after the Tunisian Revolution). The generalized least squares regression model was used to investigate the effect of the Tunisian Revolution, ownership structure and the board of directors structure on the VID.

Findings

The Tunisian companies disclose less voluntary information after the Tunisian Revolution because of a decrease in the disclosure of information related to results, intangible assets, non-financial information and management’s discussion and analysis. The authors’ findings highlight the importance of the moderating effect of the revolution. After the Tunisian Revolution, a positive relationship was found, on the one hand, between institutional ownership, board size and board independence, and the VID on the other hand. Besides, companies with dual structures and with a high level of foreign ownership are less reluctant to the VID. Moreover, different governance mechanisms are related to different types of information disclosed. These relationships were affected by the Tunisian Revolution.

Practical implications

This piece of research could be useful for managers, investors and different stakeholders. It can help managers in improving their VID and thus their companies’ transparency, mainly in developing countries and in times of crisis. Moreover, it could be helpful for investors and stakeholders for their decision-making, especially in crisis periods.

Originality/value

This study contributes to the literature by investigating the VID in a developing country and in times of crisis. It widens knowledge by analyzing the types of voluntary information disclosed. It is one of the few pieces of research investigating this issue. Moreover, it is the first research analyzing the consequences on the VID of the revolutions in the Arab countries that have experienced an Arab Spring Revolution.

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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Book part
Publication date: 20 May 2019

Rihab Grassa, Sherif El-Halaby and Khaled Hussainey

This chapter assesses the effects of corporate governance (CG) variables on the level of Corporate Social Responsibility Disclosure (CSRD), Shari'ah Supervisory Board…

Abstract

This chapter assesses the effects of corporate governance (CG) variables on the level of Corporate Social Responsibility Disclosure (CSRD), Shari'ah Supervisory Board Disclosure (SSBD), and Financial Disclosure (FD) for Islamic banks. This study, based on a sample of 95 Islamic banks, assessed this in 2013. The findings suggest that CG mechanisms, firm's age, auditor and shari'ah auditing department are effective in influencing SSBD, CSRD, and FD practices in Islamic banks. This chapter encourages regulators to improve CG mechanisms in their Islamic banking systems through the optimization of ownership structure (dispersed ownership) and the board's characteristics in order to promote transparency and disclosure. Moreover, the findings support theoretical arguments that firms disclose CG information in order to mitigate information asymmetry and agency costs and to improve investor confidence in the reported financial statements. The empirical evidence of this study enhances the understanding of the CG disclosure environment in Islamic banks as a promoting new financial system.

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

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Article
Publication date: 15 May 2009

Ali Saleh Al Arussi, Mohamad Hisyam Selamat and Mustafa Mohd Hanefah

The purpose of this paper is to investigate whether the voluntary financial and environmental disclosures through the internet can be explained by the same determinants as…

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4828

Abstract

Purpose

The purpose of this paper is to investigate whether the voluntary financial and environmental disclosures through the internet can be explained by the same determinants as in conventional reporting. Specifically, this paper examines the relationship between the extent of financial and environmental disclosures on the internet and six variables, namely, ethnicity of chief executive officer (CEO), leverage, level of technology, existence of dominant personalities, profitability, and firm size.

Design/methodology/approach

Six hypotheses were tested using data collected from 201 Malaysian listed companies on the Bursa Malaysia's Main and Second Boards for the financial year 2005. A regression model is utilized to analyze the results of this paper and this is in tandem with the previous studies.

Findings

The results indicate that level of technology, ethnicity of CEO and firm size are determinants of both internet financial and environmental disclosures. However, the existence of a dominant personality is found to negatively affect the level of financial disclosures but not environmental disclosures. The other variables did not show any significant relationship with either financial or environmental disclosures.

Originality/value

This paper investigates whether internet financial and environmental disclosures can be explained by the same determinants used in other similar studies. The results indicate that only level of technology, ethnicity of CEO and firm size are found to be significant for both internet financial and environmental disclosures.

Details

Asian Review of Accounting, vol. 17 no. 1
Type: Research Article
ISSN: 1321-7348

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