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Article
Publication date: 11 October 2021

Mahmoud Elmarzouky, Khaldoon Albitar and Khaled Hussainey

This paper aims to investigate whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it…

1199

Abstract

Purpose

This paper aims to investigate whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it examines the moderating effect of corporate governance on the relationship between Covid-19 and the performance disclosure by using three governance mechanisms: board size, board independence and gender diversity.

Design/methodology/approach

The authors use quantitative content analysis. The authors applied an automated textual analysis technique to measure the level of Covid-19 information and performance disclosure for the UK Financial Times Stock Exchange all-share non-financial firms.

Findings

The authors found a significant positive relationship between the Covid-19 disclosure and the firm performance disclosure in the annual reports. The authors also find that both board independence and gender diversity moderate the relationship between the Covid-19 related information and the level of performance disclosure in the annual reports. The authors further run a robustness analysis, which confirms the main results.

Practical implications

The finding is beneficial for the regulatory setters to better understand whether firms provide generic or meaningful Covid-19 information linked to the firm’s performance. The unique findings of this paper are relevant to regulators, governments, management, shareholders and academics.

Originality/value

The authors contribute to the literature in a unique and core research area not researched previously. The paper links the Covid-19 disclosure with the firm performance from the corporate narrative perspective. The paper underlines governance factors as a moderating role in this relationship by considering three main mechanisms: board size, board independence and gender diversity.

Details

International Journal of Accounting & Information Management, vol. 29 no. 5
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 1 September 2001

S. Mitchell Williams

Breaks with the prior literature on intellectual capital disclosure practices in two major ways. First, provides a longitudinal examination of intellectual capital…

5533

Abstract

Breaks with the prior literature on intellectual capital disclosure practices in two major ways. First, provides a longitudinal examination of intellectual capital disclosure practices in the annual reports of 31 FTSE 100 listed companies from 1996‐2000. Second, investigates the relationship between intellectual capital performance and the extent of intellectual capital disclosure. Between 1996 and 2000 the quantity of intellectual capital disclosure increased. Empirical findings did not indicate a systematic relationship between intellectual capital performance and the quantity of disclosure during the survey period. Results, however, suggest that if intellectual capital performance is too high the amount of disclosure is reduced. This negative association may support the suggestion that firms reduce intellectual capital disclosures when performance reaches a threshold level for fear of competitive advantage being lost. Leverage, industry exposure and listing status was also found to have an influence on the quantity of disclosure.

Details

Journal of Intellectual Capital, vol. 2 no. 3
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 17 April 2019

Kim Shima and Scott Fung

The purpose of this study is to use recent US legislative activity surrounding changes to the Environmental Protection Agency (EPA)/Clean Air Act in 2010, which changes…

Abstract

Purpose

The purpose of this study is to use recent US legislative activity surrounding changes to the Environmental Protection Agency (EPA)/Clean Air Act in 2010, which changes the practice of environmental policy of a firm, and the unique setting of Utility industry to examine the relationship between a firm’s voluntary accounting disclosure and environmental performance.

Design/methodology/approach

This study features hand-collected data of environmental disclosure and examines its relation with environmental performance. To address the endogeneity problem, a difference-in-differences test with propensity score matching is performed to study the impact of policy change on environmental disclosure.

Findings

The findings of this study show that measures of environmental performance have a significant and positive association with a firm’s voluntary disclosure. The results from difference-in-differences test show that adjustments in environmental performance after regulatory change have a causal and positive effect on a firm’s voluntary disclosure.

Research limitations/implications

The findings support theories of signaling and voluntary disclosure that better-performing firms provide more information disclosure of their environmental performance.

Practical implications

The findings show real adjustments in firm environmental performance and consistent voluntary disclosure around the enactment of environmental legislation, which may have important implications for environmental rule making bodies and management about the effectiveness of their regulations.

Originality/value

This study is among the first to examine the causal relationship between environmental performance and disclosure within the context of recent changes in US environmental regulation. This study also provides the Utility industry experiment with difference-in-differences test to tackle endogeneity in the relation between performance and disclosure.

Details

Meditari Accountancy Research, vol. 27 no. 2
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 1 January 2006

Marlin R.H. Jensen, Beverly B. Marshall and William N. Pugh

This study seeks to investigate whether a firm's financial disclosure size can help investors predict performance.

1763

Abstract

Purpose

This study seeks to investigate whether a firm's financial disclosure size can help investors predict performance.

Design/methodology/approach

Controlling for size and industry, the relationship between financial disclosure size and subsequent stock performance for all Standard and Poor's (S and P) 500 firms over a seven‐year period is examined.

Findings

It is found that firms with smaller 10‐Ks tend to have better subsequent performance relative to their industries. However, the findings suggest that the performance explanation may not lie in the size of the 10‐K itself. Firms with smaller 10‐Ks tend to perform better because they are smaller in terms of total assets and more focused, with fewer business segments.

Research limitations/implications

While the study is limited to examination of S and P 500 firms, no consistent evidence is found of a relation between changes in a firm's disclosure size and future performance changes.

Practical implications

The results suggest that more disclosure relative to a firm's size is not necessarily bad. Investors attempting to predict future firm performance cannot use the firm's disclosure size alone.

Originality/value

This paper extends two recent Merrill Lynch studies that appear to contradict the extant financial literature's view that increased disclosure reduces the informational asymmetry problem. While the results confirm the findings of these studies, they suggest that the performance explanation may not lie in the size of the 10‐K itself.

Details

Managerial Finance, vol. 32 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 2 November 2010

Mark Exworthy, Glenn Smith, Jonathan Gabe and Ian Rees Jones

In recent years, the clinical performance of named cardiac surgeons in England has been disclosed. This paper aims to explore the nature and impact of disclosure of…

416

Abstract

Purpose

In recent years, the clinical performance of named cardiac surgeons in England has been disclosed. This paper aims to explore the nature and impact of disclosure of clinical performance.

Design/methodology/approach

The paper draws on literature from across the social sciences to assess the impact of disclosure, as a form of transparency, in improving clinical performance. Specifically, it employs the “programme theory” of disclosure.

Findings

The “programme theory” of disclosure involves identification, naming, public sanction and recipient response. Named individual (consultant) surgeons have been identified through disclosure but this masks the contribution of the clinical team, including junior surgeons. Mortality is the prime performance measure but given low mortality rates, there are problems interpreting this measure. The naming of surgeons has been achieved through disclosure on web sites, developed between the health‐care regulator and the surgical profession itself. However, participation remains voluntary. The intention of disclosure is that interested parties (especially patients) will shun poorly performing surgeons. However, these parties' willingness and ability to exercise this sanction appears limited. Surgeons' responses are emergent but about a quarter of surgeons are not participating currently. Fears that surgeons would avoid high‐risk patients seem to have been unrealised. While disclosure may have a small effect on individual reputations, the surgical profession as a whole has embraced disclosure.

Originality/value

While the aim of disclosure has been to create a transparent medical system and to improve clinical performance, disclosure may have the opposite effect, concealing some performance issues and possibly strengthening professional autonomy. Disclosure therefore represents greater transparency in health‐care but it is uncertain whether it will improve performance in the ways that the policy intends.

Details

Journal of Health Organization and Management, vol. 24 no. 6
Type: Research Article
ISSN: 1477-7266

Keywords

Article
Publication date: 1 January 2006

James W. Bannister and Harry A. Newman

The purpose of this paper is to investigate whether proxy statement performance graph disclosures are influenced by the firm's governance structure and management concerns…

1024

Abstract

Purpose

The purpose of this paper is to investigate whether proxy statement performance graph disclosures are influenced by the firm's governance structure and management concerns about relative performance.

Design/methodology/approach

Logistic regression is used to test whether the level of performance graph disclosure decreases with lower relative performance and higher insider director membership on the compensation committee of the board. Also, Z and t‐statistics test whether bias in the selected peer group benchmark is related to insider membership on the committee.

Findings

The empirical results suggest that reporting discretion was exercised for management's benefit. The amount of explicit disclosure on cumulative returns in the performance graph decreases as relative performance declines and decreases when insider directors serve on the compensation committee. Moreover, the presence of insider directors on the compensation committee is associated with a biased choice of peer group benchmark return.

Research limitations/implications

The sample for the study consists of 141 large firms. Future research could examine a larger group of firms that vary in size or other disclosures.

Practical implications

These findings support recent actions taken to improve corporate governance. Further public policy steps could be taken. For example, the SEC could require firms to include an explanation for appointing insiders to the compensation committee.

Originality/value

The results are consistent with managers using discretion over information disclosures and suggest that compensation committees with insider members play a less active role in providing information that is helpful to shareholders.

Details

Review of Accounting and Finance, vol. 5 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 21 August 2020

Hani Tadros, Michel Magnan and Emilio Boulianne

This study aims to examine the disclosure determinants of environmental performance indicators (EPIs) for a sample of US firms to understand if these disclosures are…

Abstract

Purpose

This study aims to examine the disclosure determinants of environmental performance indicators (EPIs) for a sample of US firms to understand if these disclosures are reliable or whether they are biased towards the reporting of positive information.

Design/methodology/approach

The study uses a panel data analysis to examine the association between firms’ EPIs disclosures and their environmental performances, and other economic and legitimacy factors.

Findings

The results show that firms’ disclosures are not associated with the level of environmental performance and that firms continue to provide EPI information even if they witness a decline in their environmental performance. The evidence suggests that firms’ environmental disclosures are reliable and indicative of their environmental performance.

Practical implications

The findings suggest that mandating EPI disclosures may increase the level of the information reported and reduce firms’ discretion over the disclosure of such information.

Originality/value

Reporting of EPIs is directly linked to firms’ environmental performances. By examining the association between EPI disclosures and environmental performance, the study contributes to the ongoing debate about firms’ reporting and whether it is informative to its stakeholders or whether firms use this type of information to legitimize their operations and portray it in a positive light.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 7 September 2015

Michael Dobler, Kaouthar Lajili and Daniel Zéghal

This paper aims to propose and apply a novel risk-based approach to explore whether socio-political theories explain the level of corporate environmental disclosures given…

2261

Abstract

Purpose

This paper aims to propose and apply a novel risk-based approach to explore whether socio-political theories explain the level of corporate environmental disclosures given inconclusive evidence on the relation between environmental disclosure and environmental performance.

Design/methodology/approach

Based on content analysis of corporate risk reporting, the paper develops measures of environmental risk to proxy for a firm’s exposure to public pressure in regard to environmental concerns that should be positively associated with the level of corporate environmental disclosures according to socio-political theories. Multiple regressions are used to test the predictions of socio-political theories for US Standards and Poor’s 500 constituents from polluting sectors.

Findings

The level of environmental disclosures is found to be positively associated with a firm’s environmental risk while unrelated to its environmental performance. The findings suggest that firms tend to provide higher levels of environmental disclosures in response to greater exposure to public pressure as depicted by broad environmental indicators. The results are robust to alternative measures of environmental disclosures, environmental risk and environmental performance, alternative specifications of the economic model and additional sensitivity checks.

Research limitations/implications

This study is limited to US firms in polluting sectors. The risk-based approach proposed may not be appropriate to cover sectors where corporate risk reporting is less likely to address environmental risk, but it could potentially be adopted in other countries with advanced risk reporting regulation or practice.

Practical implications

Findings are important to understand a firm’s incentives to disclose environmental information. Cross-sectional differences found in environmental disclosures, risk and performance, highlight the importance of considering industry affiliation when analyzing environmental data.

Originality/value

This paper is the first to use firm-level environmental risk variables to explain the level of corporate environmental disclosures. The risk-based approach taken suggests opportunities for research at the multi-country level and in countries where corporate environmental performance data are not publicly available.

Article
Publication date: 13 November 2019

Yi Zhang, Gin Chong and Ruixin Jia

The purpose of this paper is to investigate the interaction between mandatory disclosures and voluntary disclosures of banks and the information content of corporate…

1473

Abstract

Purpose

The purpose of this paper is to investigate the interaction between mandatory disclosures and voluntary disclosures of banks and the information content of corporate disclosures on firm performance.

Design/methodology/approach

Based on the US-listed banks from 2007 to 2015, this paper examines the interplay among the fair-value measurement, corporate governance disclosure and voluntary social responsibility disclosure. In addition, the paper examines the extent of such disclosure of mandatory items (fair-value measurement) versus voluntary items (corporate governance and social responsibility issues) on banks’ performance in terms of their return on equity and return on asset.

Findings

This paper finds that banks with a higher social responsibility disclosure score and stronger corporate governance tend to have lower percentages of Level 3 fair-value assets. Banks with a higher Level 3 fair-value asset disclosure have a lower financial performance.

Practical implications

This paper provides evidence of the interplay of various corporate disclosures by banks and implies that banks use fair-value measurements to disguise their poor performance. The findings provide insights for the policymakers, investors and regulators to assess banks’ disclosure.

Originality/value

This paper extends the study of banks’ fair-value measurements and is the first study to examine the interaction between voluntary and mandatory disclosures. This study sheds lights on the theories of performativity, agency and stakeholder by demonstrating the information contents of corporate disclosures on firm performance.

Article
Publication date: 21 September 2010

Voicu D. Dragomir

Is the natural environment a stakeholder of the firm? And is there a business case for achieving sustainability? The purpose of this paper is to trace a tripartite…

2514

Abstract

Purpose

Is the natural environment a stakeholder of the firm? And is there a business case for achieving sustainability? The purpose of this paper is to trace a tripartite relationship, involving environmental disclosure, environmental performance, and financial performance of environmentally sensitive activities of companies in a European setting.

Design/methodology/approach

A sample of 60 of the largest European Union industrial business groups, extracted from the FTSEuroFirst 300, and an environmental disclosure index inspired by the Global Reporting Initiative Guidelines, form the basis for the content analysis of the most recent sustainability reports published before the end of 2008.

Findings

A significant association is found between contemporaneous environmental performance and disclosure, in that bigger polluters tend to disclose more on their activities, but only to a moderate statistical effect. However, no association is found between environmental performance and financial performance, as well as between environmental disclosure and contemporaneous firm performance.

Practical implications

This result suggests that even though big polluters tend to report more, the transparency level of their activities may not be sufficient for a viable assessment of sustainability. For such “environmentally challenged” companies, their reputation‐building strategy is mainly focused on preserving or repairing legitimacy.

Originality/value

The paper considers two complementary aspects: first, that the relationship between sustainability commitment and financial performance may be so weak that it is barely detectable; and second, that cross‐sectional studies may fail in capturing a relationship that is normally shaped over longer periods of time.

Details

Journal of Accounting & Organizational Change, vol. 6 no. 3
Type: Research Article
ISSN: 1832-5912

Keywords

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