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This paper aims to investigate whether the amount of local governments’ debt can be predicted by the level of political competition.

The study uses the artificial neural network (ANN) to test whether ANN can “learn” from the observed data and make reliable out-of-sample predictions of the target variable value (i.e. a local government’s debt level) for given values of the predictor variables. An ANN is a non-parametric prediction tool, that is, not susceptible to the common limitations of regression-based parametric forecasting models, e.g. multi-collinearity and latent non-linear relations.

The study finds that “political competition” is a useful predictor of a local government’s debt level. Moreover, a positive relationship between political competition and debt level is indicated, i.e. increases in political competition typically leads to increases in a local government’s level of debt.

The study contributes to public sector reporting literature by investigating whether public debt levels can be predicted on the basis of political competition while discounting factors such as “political ideology” and “fragmentation”. The findings of the study are consistent with the expectations posited by public choice theory and have implications for public sector auditing, policy and reporting standards, particularly in terms of minimising potential political opportunism.

This study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.

This study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.

The authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.

The authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.

This study aims to investigate the relation between firms’ use of related party transactions (RPTs) and cost of debt (COD) in Gulf Cooperation Council (GCC) countries.

The authors obtain data from annual reports and the Standard and Poor’s Capital IQ database over the period 2005–2016 period of nonfinancial publicly listed firms on the UAE, KSA, Oman, Bahrain, Kuwait and Qatar stock exchanges. Using a final sample of 1,810 firm-year observations, the authors empirically assess the relation between strategic use of RPTs, the COD issuance and the moderating effects of governance mechanisms.

The authors find that high levels of total RPTs and purchase-based RPTs increase firms’ COD. Furthermore, propping of sales through increased sale-based RPTs is found not to have a significant effect on firms’ COD. The authors also find that ownership factors pertaining to family member founding and royal family ownership negatively moderate the association between the firm’s RPTs and COD. Additionally, the voluntary formation of executive committees has a positive and significant mediating effect on the relation between firms’ purchase-based RPTs and COD. The results are robust to several additional tests and alternative measurement specifications.

The positive relationship between purchase-based RPTs and firm financing costs is magnified in countries with high quality of RPT disclosures. This has implications for funding of GCC entities by governments and financial institutions.

To the best of the authors’ knowledge, this study is the first to examine how wealth transfer via RPTs in the GCC region is associated with higher COD. The authors also contribute to the outcome of emerging governance regimes in the GCC, which could impact the level of credit risk and/or default risk faced by a firm and, thus, the relation between RPTs and COD. In doing so, the authors provide a more nuanced study by investigating the potential channels that could account for such a relation in an emerging market setting.

The purpose of this paper is to examine the relation between financial statement comparability and corporate investment efficiency of a large sample of US firms.

The authors use a large sample of US-listed firms from 1981 to 2013. The authors use several econometric methods including ordinary least square, firms fixed effects and mediation effects regression. Sensitivity tests that include the use of alternative measures of both the dependent and independent variables provide results that are consistent with the authors’ baseline model results.

The authors find that financial statement comparability mitigates risks associated with both under-investment and over-investment. They also find that product market competition mediates the relation between financial statement comparability and investment efficiency. The authors consider this to be a function of a competitive environment, whereby firms normally disclose less private information. This in turn reduces the effect of financial statement comparability on investment efficiency. Conversely, where there are higher levels of product market competition, it is less likely that firms will under-invest. Their results are consistent with these predictions.

The authors contribute to this growing field of research by providing evidence that financial statement comparability does in fact improve firms’ investment efficiency. Findings enhance our understanding of the relation between investment efficiency and financial statement comparability which is likely to have flow-on effects in terms of financial reporting quality and firm value. This study also contributes to research that links agency theory to financial statement comparability through an analysis of moral hazard and adverse selection tenets, and how it leads to reduced levels of investment inefficiency in a firm.

The purpose of this paper is to examine the association between debt maturity structure and stock price crash risk in Australia.

The authors employ panel data estimation with industry and year fixed effects. The paper uses a sample of 1,548 publicly listed Australian firms (8,661 firm-year observations) covering the 2000–2015 period.

Stock price crash risk is positively and significantly associated with the long-term debt maturity structure of firms. In addition, this positive association is more pronounced for firms with a more opaque information environment.

This is the first study to examine stock price crash risk in Australia. The findings are value relevant as it uncovers how debt maturity structure affects shareholders' wealth protection.

This paper aims to investigate the impact of women on the board of directors on corporate tax avoidance in Australia.

The authors use multivariate regression analysis to test the association between the presence of female directors on the board and tax aggressiveness. They also test for self-selection bias in the regression model by using the two-stage Heckman procedure.

This paper finds that relative to there being one female board member, high (i.e. greater than one member) female presence on the board of directors reduces the likelihood of tax aggressiveness. The results are robust after controlling for self-selection bias and using several alternative measures of tax aggressiveness.

This study extends the extant literature on corporate governance and tax aggressiveness. This study is subject to several caveats. First, the sample is restricted to publicly listed Australian firms. Second, this study only examines the issue of women on the board of directors and tax aggressiveness in the context of Australia.

This research is timely, as there has been increased pressure by government bodies in Australia and globally to develop policies to increase female representation on the board of directors.

This study is the first to provide empirical evidence concerning the association between the presence of women on the board of directors and tax aggressiveness.

This paper seeks to investigate the corporate governance determinants of financial instrument disclosure (FID) practices of Australian listed resource firms in their annual reports for the 2005 financial year. This is an important time period to explain FID patterns for Australian resource companies leading up to formal adoption of the Australian equivalents to the International Financial Reporting Standards (IFRS).

The extent of FID was measured using a Financial Instrument Disclosure Index (FIDI) comprised of 120 items of both mandatory and discretionary financial instrument information. Hypothesis testing used empirical data from a representative sample of Australian listed resource firms.

The results of regression analysis demonstrate that corporate governance characteristics of firms are significant determinants of FID patterns. Univariate and multivariate results showed that FIDs were significantly and positively associated with strength of corporate governance structure and the control variables – leverage, firm size and industry.

This paper contributes to an emerging paradigm that emphasises the link between firms' governance structures and their disclosure responses to financial instruments and in particular, financial derivatives.

This paper aims to examine the extent of financial ratio communication from an agency theory perspective.

An empirical positivist approach is utilised to explore the predictors of disclosure within the 2007 annual reports of 300 Australian listed companies.

Overall, the extent of financial ratio disclosures is very low (5.3 per cent) with more extensive disclosures within the sub‐categories of share market measure, profitability and capital structure. A far lower liquidity and cash flow ratio information is reported. Larger firms with more dispersed share ownership provide more extensive financial ratio information than the others. Further, profit‐making firms and Big4 clients exhibit more extensive financial ratio disclosures. Resources firms present significantly lower incidents of financial ratio than the financials and services sector. Corporate governance and capital management initiatives do not have predictive properties.

Financial ratio disclosure, although important, is under‐researched. A comprehensive set of predictors are investigated. The findings highlight the need for Australian regulators to consider more explicit guidelines or mandatory requirements.

The purpose of this paper is to investigate the impact of corporate governance on voluntary disclosure of different types of information in annual reports of Malaysian listed firms.

A linear regression model is used to test the association between the level of voluntary disclosure of five key information categories and corporate governance. The sample consists of 100 firms over three different socio‐economic periods: 1996, 2001 and 2006.

There are significant increases in all the key information categories with better communication most pronounced between 1996 and 2001, and a noticeably lower level of communication growth between 2001 and 2006. The strength of a firm's corporate governance structure clearly influences the voluntary disclosure of information relating to corporate and strategic directions, directors and senior management, financial and capital markets, forward‐looking projections and corporate social responsibility in 2001 and 2006.

The use of a governance index to arrive at an overall corporate governance score has the potential to mask major underlying relationships of individual governance attributes. The use of the self‐constructed disclosure indices may also omit certain information items that are employed in other prior studies. Moreover, the different categories of disclosures are solely constructed on the information disclosed in the annual reports without considering the alternative avenues.

The results will assist regulators and policy‐makers to better understand the impact of corporate governance on the voluntary disclosure of different types of corporate information in Malaysia.

This study generates evidence of the changing scene of management voluntary disclosure practices embedded in the corporate governance framework in a developing country with an emerging capital market.

The purpose of this research is to investigate the factors determining the social and environmental reporting (SER) of Indian textile and apparel (TA) firms.

The 2010 annual reports of a sample of top 100 Indian TA firms listed on the Bombay Stock Exchange were examined to assess the extent of SER. SER was assessed based on the Global Reporting Initiative index applicable to the TA industry. Multiple regression analysis was conducted to investigate the determinants of SER.

This study reports a low extent of SER in the annual reports of Indian listed TA firms, with a mean disclosure of 14 per cent. On average, firms reported more extensive environmental information, with a mean disclosure of 18.4 per cent, compared to social information, with a mean disclosure of 10.7 per cent. Most firms reported social information relating to “labour practices and decent work”, while the reporting of information relating to “human rights” was sparse. Overall, the SER patterns provide support for legitimacy theory. Consistent with legitimacy theory expectations, corporate size, brand development and audit committee size are significant factors determining the variation in SER. No significant relationship was found between board independence, level of ownership and SER.

There is no existing study specifically on SER by TA firms in India. In fact, there is surprisingly little research on SER in the Indian context in general. Given the dearth in research on corporate social reporting in the Indian context, the study extends prior literature on corporate SER by concentrating on SER of TA firms in an emerging economy. The theoretical contribution of this study is the testing of legitimacy theory in the context of an emerging economy. This study contributes towards practice by delineating the relationship between governance structure and SER, particularly with regard to issues such as child labour. These findings have implications for the future development of reporting standards and regulations in regard to corporate governance in India. The dearth of social reporting by Indian TA firms has implications for foreign purchasers of branded products, as international companies have been implicated in sub-optimal social or environmental practices or incidents.