Marie Josée Ledoux, Denis Cormier and Sylvain Houle
The purpose of this paper is to study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, the paper explores the relationships…
Abstract
Purpose
The purpose of this paper is to study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, the paper explores the relationships between customer value disclosure, analyst following, and earnings forecasts, taking into account environmental dynamism as captured by R&D intensity, sales variability, and the reverse of industry concentration.
Design/methodology/approach
The paper considers the possibility that a firm's information dynamics may simultaneously affect disclosure strategy, analyst following, and analyst forecasts. Regression models are used in the testing of the hypotheses.
Findings
First, results show that customer value disclosure is positively associated with analyst following and consensus in analyst earning forecasts. Second, environmental dynamism enhances the association between customer value disclosure and analyst following as well as consensus among analysts. Those results suggest that customer metrics attract analysts and improve their ability to forecast earnings. Moreover, customer value disclosure appears particularly relevant for forecasting earnings of firms involved in dynamic environments.
Practical implications
Customer value disclosure would allow financial analysts to better assess future earnings in a context of uncertainty. Moreover, analysts may be reluctant to follow a firm facing high environmental dynamism without a clear corporate disclosure commitment. In such a context, managers may consider disclosing strategic information in an attempt to attract financial analysts.
Originality/value
The findings reveal that the relations between customer value disclosure, analyst following, and analyst forecasts are not straightforward but are affected by a firm's environmental uncertainty.
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Keywords
Denis Cormier, Marie‐Josée Ledoux and Michel Magnan
The aim of the paper is to investigate whether social disclosure and environmental disclosure have a substituting or a complementing effect in reducing information asymmetry…
Abstract
Purpose
The aim of the paper is to investigate whether social disclosure and environmental disclosure have a substituting or a complementing effect in reducing information asymmetry between managers and stock market participants
Design/methodology/approach
This study attempts to provide a comprehensive analysis of a firm's social and environmental disclosure strategy. The authors posit that this strategy simultaneously affects information asymmetry and disclosure.
Findings
Findings suggest that social disclosure and environmental disclosure substitute each other in reducing stock market asymmetry.
Research limitations/implications
The measurement of social and environmental disclosure is based upon a coding instrument that makes some explicit assumptions about the value and relevance of information. Moreover, information asymmetry cannot be directly measured and is inferred from the behaviour of proxy variables such as share price volatility and bid‐ask spread.
Practical implications
Results suggest that social disclosure reinforces the informativeness of environmental disclosure for stock markets, even substituting for it under certain conditions. Stakeholders must assess and retain an increasing flow of information: a more efficient disclosure strategy becomes critical if firms want to convey the right picture of their CSR performance.
Originality/value
To the best of the authors' knowledge, this is the first study to explore the joint effect of social disclosure and environmental disclosure in reducing information asymmetry.
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Marie‐Josée Ledoux and Denis Cormier
The purpose of this paper is to investigate the incidence of International Financial Reporting Standard (IFRS) on stock market assessment of intangibles and voluntary disclosure…
Abstract
Purpose
The purpose of this paper is to investigate the incidence of International Financial Reporting Standard (IFRS) on stock market assessment of intangibles and voluntary disclosure about innovation.
Design/methodology/approach
The authors develop three regression models. The first model investigates the stock market valuation of intangible assets and disclosure about innovation. The second model desegregates earnings to assess the relevance of components related to intangibles. The third model investigates how intangible expenses and voluntary disclosure affect analysts forecast dispersion.
Findings
Results show that the value relevance of intangible assets and expenses improves with the adoption of IAS 38. Overall, results indicate a decrease in the value relevance of voluntary disclosure about innovation under IFRS. More specifically, results suggest some overlap in the information content of mandated and voluntary disclosure for stock market valuation of intangible assets under IFRS. Findings also suggest that voluntary disclosure moderates market's assessment of expensed intangibles under both Canadian GAAP and IFRS.
Research limitations/implications
IAS 38 requires entities to recognize an intangible asset if certain criteria are met and to disclose specific information about it. In such a context, market participants may refer to a greater extent to financial reporting and to a lesser extent to voluntary disclosure when valuating intangibles.
Practical implications
Managers will have an incentive to better target their communications to ensure a degree of complementarity with financial reporting. In this sense, this study contributes to the voluntary disclosure literature.
Originality/value
To the best of the authors' knowledge, this is the first study to investigate the relationship between mandatory disclosure and voluntary disclosure about intangibles and evaluate the impact of IFRS on this matter.
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Denis Cormier, Marie‐Josée Ledoux, Michel Magnan and Walter Aerts
The purpose of this paper is to investigate the impact of governance on information asymmetry between managers and investors. Hence, the paper seeks to extend prior voluntary…
Abstract
Purpose
The purpose of this paper is to investigate the impact of governance on information asymmetry between managers and investors. Hence, the paper seeks to extend prior voluntary disclosure research.
Design/methodology/approach
The paper investigates how a firm's governance maps into the level of information asymmetry between managers and investors. Governance encompasses two complementary dimensions: formal monitoring attributes and voluntary disclosure about board processes. Information asymmetry is measured by either share price volatility or Tobin's Q.
Findings
The results show that some formal monitoring attributes (board and audit committee size) as well as the extent of voluntary governance disclosure reduce information asymmetry. This suggests that governance disclosure may complement a firm's governance monitoring attributes, especially in a country such as Canada where investors have good legal protection. It appears also that firms take into account ultimate costs and benefits to shareholders when determining their governance disclosure.
Originality/value
To the best of the authors' knowledge, this study is the first to investigate the impact of voluntary governance disclosure on information asymmetry.
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Nana Adwoa Anokye Effah, Michael Asiedu and Octavia Ama Serwaa Otchere
This work aims to analyze and observe the trends in the literature on corporate governance and disclosure. The study presents bibliometric analyses from the Scopus database for…
Abstract
Purpose
This work aims to analyze and observe the trends in the literature on corporate governance and disclosure. The study presents bibliometric analyses from the Scopus database for the period 1991–2020.
Design/methodology/approach
A bibliometric analysis is conducted on 1,697 studies on corporate governance and disclosure across several countries. The articles were assessed and visualized with Vosviewer based on the authors, sources and countries with the highest publication rate, journals with the most published research and highly cited articles and authors.
Findings
The analyses provide a comprehensive outlook of the field, and the results show the dominance of documents on corporate governance and disclosure in 2020. The results have been discussed with avenues for further research.
Originality/value
This paper focuses on corporate governance and disclosure research from the Scopus database to highlight the extensive and somewhat ignored areas in extant literature. This would aid upcoming researchers in identifying scholars in the field when exploring future research avenues to close ensuing gaps.