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Article
Publication date: 7 April 2015

Marna De Klerk, Charl de Villiers and Chris van Staden

The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using…

Abstract

Purpose

The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR data from an independent firm and a time period and setting (the UK) that coincides with increased legislation and increased public awareness of corporate social and environmental issues. Against a background of increased interest by investors in CSR disclosure, prior mixed results on the association between CSR disclosure and share prices suggest the need for further research that overcome some of the identified limitations of the extant literature.

Design/methodology/approach

A modified Ohlson (1995) model is used to examine the relationship between CSR disclosure and share prices among the 100 largest UK companies. Three different measures of CSR disclosure are used to ensure robustness of results.

Findings

The paper finds that higher levels of CSR disclosure are associated with higher share prices. Furthermore, the paper provides evidence that CSR disclosure by companies operating in environmentally sensitive industries show a stronger association with share prices than CSR disclosure by companies operating in other industries. The paper concludes that CSR disclosure provides incremental value-relevant information to investors beyond financial accounting information.

Originality/value

To the best of our knowledge, this is the first paper to provide evidence of the incremental value of CSR disclosure to share price determination in the UK, a country where CSR disclosure is high on the agenda. Our findings provide evidence that CSR disclosures by companies and, in particular, disclosures following the global reporting initiative(GRI) guidelines, are useful to investors and shareholders, as it is related to share price information.

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Article
Publication date: 29 June 2012

Marna de Klerk and Charl de Villiers

Corporate responsibility reporting (CRR) deals with companies’ ethical, economic, environmental, and social impacts. The purpose of this paper is to contribute to the…

Abstract

Purpose

Corporate responsibility reporting (CRR) deals with companies’ ethical, economic, environmental, and social impacts. The purpose of this paper is to contribute to the debate on whether CRR is associated with the information set that shareholders use to value a company's equity and therefore, the value‐relevance thereof for investment decision making.

Design/methodology/approach

The paper uses a modified Ohlson model developed by Hassel, Nilsson and Nyquist to examine the role of CRR in providing information to shareholders that may affect their valuation of a company. The paper uses two data sets, namely a KPMG dataset on the CRR of the top 100 South African companies and the McGregor BFA database for financial data.

Findings

It was found that the share prices of companies with higher levels of CRR are likely to be higher.

Originality/value

Prior research in which different valuation methods and different assessment periods were used was conducted in different developed countries. Some studies show value relevance, while others do not. South Africa is a developing country and by bringing a developing country to the literature the authors’ aim is to contribute to the current debate on the value relevance of CRR.

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Article
Publication date: 5 October 2015

Elizabeth Mey and Marna de Klerk

– The purpose of this paper is to examine whether Chartered Accountants South Africa (CAs(SA)) as Chief Executive Officers (CEOs) have an association with accruals quality.

Abstract

Purpose

The purpose of this paper is to examine whether Chartered Accountants South Africa (CAs(SA)) as Chief Executive Officers (CEOs) have an association with accruals quality.

Design/methodology/approach

The theoretical base of this paper is the link between accounting expertise and accruals quality. The sample consists of 812 observations of Johannesburg Stock Exchange (JSE)-listed firms between 2010 and 2013. The association is tested by regressing the CA(SA) as CEO interest variable and control variables on accruals quality, using three metrics of abnormal accruals.

Findings

The overall results suggest that less accruals management and estimation error is present when the CEO is a CA(SA).

Originality/value

This is the first study to test the association between having a CEO with a professional accounting qualification, such as CA(SA), and accruals quality. The findings will be of interest to shareholders and top executives when evaluating the appointment of a CEO.

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Article
Publication date: 13 April 2015

Lorenzo Massa, Federica Farneti and Beatrice Scappini

– The aim of this study is to shed light on the mechanisms involved in, and consequences of, developing a sustainability report in a small to medium enterprise.

Abstract

Purpose

The aim of this study is to shed light on the mechanisms involved in, and consequences of, developing a sustainability report in a small to medium enterprise.

Design/methodology/approach

Action research is used to provide insights into the initial stages of the development of the sustainability report and its consequences. “Mike” is an Italian small organisation with a sustainability orientation selling products and services about wellness and health. It decided to develop a sustainability report in 2013.

Findings

The authors find that the organisation’s initial aim to report on its sustainability later extended beyond disclosure to using the information to enhance its sustainable development approach and awareness, consider long-term planning, support strategy-making based on the sustainable development concept and establish and enhance its reputation.

Research limitations/implications

This research is limited to the analysis of only one small Italian organisation and as such cannot claim generalisability of its findings.

Practical implications

The findings indicate that the sustainability initiative of this organisation, while originally focussed on reporting, evolved into strategy and planning. Managers in similar organisations may learn from this experience to focus on strategy-making and social and environmental value creation.

Originality/value

The study examines sustainability reporting in the previously overlooked area of small and medium enterprises.

Details

Meditari Accountancy Research, vol. 23 no. 1
Type: Research Article
ISSN: 2049-372X

Keywords

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Article
Publication date: 11 April 2016

Wessel M. Badenhorst

The purpose of this paper is to investigate whether investors value the future growth from acquisitions and the subsequent realisations thereof accurately.

Abstract

Purpose

The purpose of this paper is to investigate whether investors value the future growth from acquisitions and the subsequent realisations thereof accurately.

Design/methodology/approach

The paper calculates conventional and adjusted market-to-book ratios and investigates abnormal cumulative returns over 20 quarters after portfolio formation for a sample of Standard & Poor’s 500 firms using a hedge portfolio and regression approach.

Findings

Hedge portfolios formed using adjusted market-to-book ratios underperform conventional hedge portfolios over a five-year period. Dividing the hedge into its comprising elements reveals that the underperformance of the adjusted hedge is mainly caused by weaker returns from value firms.

Research Limitations/implications

Findings are specific to large firms in a specific setting, and future research is needed to determine if findings are equally applicable to other situations. Findings imply that investors underrate the growth from new acquisitions and overrate the extent to which this has materialised.

Practical Implications

The paper highlights that the extrapolation of future growth rates should be carefully considered in any equity valuation of a firm with current or past acquisitions.

Originality/value

This paper shows that inaccurate valuation of the growth of new acquisitions and the realisation thereof is at least partially responsible for the value versus growth phenomenon. It shows that the accounting information could be improved and highlights the importance of extrapolating past growth rates with care.

Details

Meditari Accountancy Research, vol. 24 no. 1
Type: Research Article
ISSN: 2049-372X

Keywords

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Article
Publication date: 5 October 2015

Wessel Marthinus Badenhorst

This paper aims to investigate the extent to which different prices within the bid-ask spread are used for fair value measurements and evaluate the potential consequences…

Abstract

Purpose

This paper aims to investigate the extent to which different prices within the bid-ask spread are used for fair value measurements and evaluate the potential consequences thereof.

Design/methodology/approach

The paper investigates different Level 1 fair value measurements of exchange-traded funds’ (ETFs) equity investments. Using descriptive methods, it compares actual and stated fair value measurement policies. In addition, comparative value relevance of these measurements is investigated in regression analysis.

Findings

Most fair value measurements are based on closing prices, but stated accounting policies and actual measurements frequently differ. Results also show that the bid-close spread of underlying investments is value-relevant in determining the bid-close spreads of ETFs themselves.

Research limitations/implications

Findings are specific to unleveraged ETFs, the sample country and sample period used and only apply to investments in listed equities. Conclusions from this study may assist in predicting market perceptions of the risk of listed equity portfolios.

Practical implications

This paper sheds light on the practical impact of the recent change in fair value measurement guidance.

Originality/value

This study provides evidence on the size of the bid-ask spread of actual investment portfolios and its potential impact. It shows that bid-close spreads of underlying investments are used to price the bid-close spreads of ETFs themselves and that stated and actual accounting policies often differ. Findings imply that standard-setters might be influenced by actual accounting practices.

Details

Meditari Accountancy Research, vol. 23 no. 3
Type: Research Article
ISSN: 2049-372X

Keywords

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