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Book part
Publication date: 30 March 2023

Emrah Ekici and Pedro Sottile

The authors examine the relationship between credit default swaps (CDS) initiation and managers’ earnings forecast choices with different corporate governance structures. The

Abstract

The authors examine the relationship between credit default swaps (CDS) initiation and managers’ earnings forecast choices with different corporate governance structures. The authors expect that corporate governance plays a significant role in managers’ disclosure behavior as well as CDS initiation. The findings suggest that CDS initiation and managers’ earnings forecast behavior are positively associated. Firms with a strong monitoring mechanism issue a higher number of earnings forecasts and also issue forecasts more frequently when there is a traded CDS contract in the market. Additionally, the results suggest that managers issue more accurate earnings forecasts. Overall, these findings imply that the role of managers is important to mitigate the information asymmetry between individual and institutional investors when there is a new financial instrument because the development of the regulations and market rules for these instruments takes a longer time.

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Article
Publication date: 1 January 1999

Fawzi Laswad and Y.T. Mak

This study extends the study by Laswad and Mak (1997) on the interpretation of probability expressions used in accounting standards by New Zealand standard setters, by comparing…

337

Abstract

This study extends the study by Laswad and Mak (1997) on the interpretation of probability expressions used in accounting standards by New Zealand standard setters, by comparing the interpretations of standard‐setters with practicing accountants. The results generally show that the ranking of phrases of probability expressions by accountants is similar to standard‐setters. Further, similar to standard‐setters, accountants interpret many different probability expressions used in accounting standards as if they denote similar probability levels. This suggests that some probability expressions are redundant. The reduction of probability expressions may facilitate greater consistency in the application of accounting standards and consequently greater comparability in financial reporting. The results also indicate that, similar to standard‐setters, there is considerable disagreement among accountants in the interpretation of probability expressions, which suggest that to enhance comparability in financial reporting, guidance in the interpretation of such phrases is needed.

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Pacific Accounting Review, vol. 11 no. 1/2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 January 2000

WEN‐HSI LYDIA HSU, David Hay and Sidney Weil

This study examines the accuracy and bias of profit forecasts disclosed in prospectuses by New Zealand companies for initial public offerings during the period 1987 to 1994. The…

212

Abstract

This study examines the accuracy and bias of profit forecasts disclosed in prospectuses by New Zealand companies for initial public offerings during the period 1987 to 1994. The results show that profit forecasts in this period are, on average, more accurate titan those disclosed prior to 1987, which were examined in prior studies. However, the results reject the null hypothesis that profit forecasts are accurate. In examining forecast bias, the evidence shows that the forecasts are, on average, somewhat pessimistic, but not sufficiently to reject the hypothesis that profit forecasts are unbiased. Tests of the determinants of error show that larger companies make more accurate forecasts, and forecasts made in the year 1987 are less accurate than in other years. Tests of the determinants of bias show that forecasts made in 1987 are also more optimistic, and that companies with longer trading histories and pessimistic forecasts make less biased forecasts. Forecast period and industry type are not significantly related to error or bias.

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Pacific Accounting Review, vol. 12 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 7 May 2019

Christine Adel, Mostaq M. Hussain, Ehab K.A. Mohamed and Mohamed A.K. Basuony

This paper aims to report on the quality of corporate social responsibility (CSR) disclosure in S&P Europe 350 companies. The paper also examines the impact of corporate…

3720

Abstract

Purpose

This paper aims to report on the quality of corporate social responsibility (CSR) disclosure in S&P Europe 350 companies. The paper also examines the impact of corporate governance structure and other firm-specific characteristics on the quality of CSR disclosure in European companies.

Design/methodology/approach

The paper uses a disclosure index adopted from Jizi et al. (2014). Moreover, the paper contributes to the CSR disclosure literature by developing a new index that includes all the aspects introduced by the Global Reporting Initiative version 4.The data of CSR reporting are manually collected from the firms’ reports. The population and sample of this study are related to 350 companies operating in 16 European countries. Tobit regression analysis is used to test the hypotheses.

Findings

The results reveal that directors’ ownership, the presence of a CSR committee and firm size positively affect the quality of CSR reporting. Further testing of the independent variables on each CSR sub-category is made. The CSR sub-categories used are, namely, community involvement, employees, environment, social product and service quality, supply chain sustainability and business ethics. The presence of a sustainability committee inside the company is the only factor that shows a strong positive effect on the disclosure of every CSR sub-category and the CSR inclusive index.

Research limitations/implications

The limitations of this research are that it focuses exclusively on the effect of the internal corporate mechanisms on the quality of CSR reporting; disregarding the economic, institutional, political and cultural factors that can play a role in influencing sustainability reporting of the companies.

Practical implications

Better CSR disclosure leads to the firm having a better image in the society; this, in turn, has implications on firm performance, attracting funds, as well as recruiting and retaining high profile employees. Stakeholders are placing cumulative significance to corporate transparency particularly in the area of CSR. Managers should exert more efforts into not only improving the disclosure of the various facts of CSR but also into using the various media available for disclosure. Companies should take the initiative of establishing a CSR committee to ensure effective formation and implementation of CSR policies and disclosure of CSR activities.

Social implications

The CRS research itself bears the merit of social implications. Moreover, the findings of this research pave the way for future researches to examine the effect of the adoption of global CSR initiatives and frameworks on the quality of CSR reporting.

Originality/value

This paper contributes to the CSR disclosure literature by developing a new index that includes all the aspects of CSR and exploring the relation between the rarely explored “presence of sustainability committee” and CSR disclosure, as well as testing a vast number of CSR sub-categories that is not extensively covered in previous studies. Moreover, the paper covers a large sample of companies across 16 European countries, in terms of their stand-alone sustainability reports, dedicated chapters of CSR in annual reports, integrated reports, website CSR information and any attachments/links provided on the websites for further CSR documents, brochures or data sheets.

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International Journal of Accounting & Information Management, vol. 27 no. 2
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 19 November 2006

Mahmud Hossain, Barry R. Marks and Santanu Mitra

The ownership structure of a corporation can alleviate the agency problem that arises between shareholders and managers of a corporation, which implies that the ownership…

355

Abstract

The ownership structure of a corporation can alleviate the agency problem that arises between shareholders and managers of a corporation, which implies that the ownership composition of a firm may infl uence the level of voluntary disclosure. This study investigates whether the ownership structure of U. S. based multinational corporations affects the managerial decision to voluntarily disclose quarterly foreign segment data. The empirical results show that the three ownership variables of interest, institutional stock ownership, managerial stock ownership and outside blockholder stock ownership are inversely related to the level of voluntary disclosure of quarterly foreign segment data. Therefore, it is inferred that an increase in the proportion of outstanding common stock held by these ownership groups is accompanied by a decrease in the probability that a U.S. multinational firm voluntarily discloses quarterly foreign segment data.

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Multinational Business Review, vol. 14 no. 3
Type: Research Article
ISSN: 1525-383X

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Book part
Publication date: 10 November 2020

George Varghese and Aghila Sasidharan

Corporate governance plays a decisive role in the financial performance of a firm. While the majority of the firms in China and India are owned and managed by its promoters, the…

Abstract

Corporate governance plays a decisive role in the financial performance of a firm. While the majority of the firms in China and India are owned and managed by its promoters, the present study attempts to examine the impact of ownership structure and board characteristics on firm value for these two economies. The study employs panel data methodology with industry and time fixed effects on a sample of 1,042 firms listed in National Stock Exchange of India and 450 firms listed in Shanghai Stock Exchange of China. The study finds promoter ownerships to positively impact a firm’s value creation process, while institutional investors exert a negative influence. Although CEO duality enhances firm value in China, the results show otherwise for Indian firms. Additionally, while board independence is positively correlated to firm value in India, it has a negative effect on firms in China. Finally, the study finds that larger board size contributes favorably toward better decision making.

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Financial Issues in Emerging Economies: Special Issue Including Selected Papers from II International Conference on Economics and Finance, 2019, Bengaluru, India
Type: Book
ISBN: 978-1-83867-960-6

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Book part
Publication date: 6 September 2018

Wonlop Buachoom

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually reported…

Abstract

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually reported from previous studies, this study tries to clarify a reason for the mixed finding by determining the impact of board structures on different quantile levels of firm performance. Building on extant literature and using a developed econometric technique, the Quantile Analysis, on a sample of 446 listed firms in Thailand for a 15-year period ranging from 2000 to 2014, empirical evidence is provided which is consistent with prior studies that some characteristics of the board as the core mechanisms of corporate governance, i.e., board independence, board size, board meeting frequency, and dual role leadership on board, have significant influence on performance of Thai firms. In particular, when considering different quantile levels of firm performance, board structures are found to have different effects across quantile of performance distribution. Board independence and dual role leadership on board are found to have a significant influence on only moderate-performing firms, while board size and board meeting frequency are revealed as having significant impact on only firms with high-performance which need more effectiveness of the board in overseeing and supervising decision-making of the executives. Thus, these findings indicate that considering different quantile levels of firm performance for the board structures and performance relationship should be a reason of previous mixed findings. Moreover, the findings should be important information in encouraging better understanding an optimal governance system in Thailand for related stakeholders such as policymakers, corporate firms, and investors.

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Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-78756-446-6

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Article
Publication date: 6 July 2023

Mohammad A.A. Zaid

From an agency theory realm, this study aims to respond to the more recent calls to deeply analyze the indirect influence of professional shareholders, namely, institutional…

340

Abstract

Purpose

From an agency theory realm, this study aims to respond to the more recent calls to deeply analyze the indirect influence of professional shareholders, namely, institutional, blockholder and foreign owners, on the extent of compliance with International Financial Reporting Standards (IFRS) mandatory reporting requirements.

Design/methodology/approach

Multivariate regression analysis was applied. Moreover, quantitative static and dynamic panel data have been used. More plainly, ordinary least squares was run as a baseline estimator. Afterwards, one-step system generalized method of moment and two-stage least squares were conducted to control for the potential endogeneity dilemma. The analysis is based on a sample of nonfinancial listed firms on the Palestine Stock Exchange for the time span of 10 years, from 2010 to 2019.

Findings

After controlling for the detrimental effect of the endogeneity issue, the findings clearly reveal that the effect of the three types of professional shareholders (institutional, blockholder and foreign) on the extent of compliance with IFRS is more significant under a high proportion of independent nonexecutive directors.

Originality/value

To the best of the author’s knowledge, prior literature on the nexus between shareholding structure and compliance level with IFRS has restricted solely to analyzing the direct influence without casting the light on the moderation effect of independent nonexecutive directors. Hence, analyzing this sensitive configuration merits attention. In this vein, to ameliorate the compliance level with IFRS, regulators have to devote remarkable effort to updating both enforcement mechanisms and best practices of shareholding structure simultaneously.

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International Journal of Accounting & Information Management, vol. 31 no. 4
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 1 March 2005

Faten Lakhal

The primary objective of this paper is to study the relationship between voluntary earnings disclosures and a combined set of corporate governance attributes in France. We use…

928

Abstract

The primary objective of this paper is to study the relationship between voluntary earnings disclosures and a combined set of corporate governance attributes in France. We use binary logit models to check our hypotheses. The results indicate significant negative associations between voluntary earnings disclosures and ownership concentration, and between voluntary earnings disclosures and a unitary leadership structure. The results also show that French firms providing voluntary earnings disclosures are more likely to have higher foreign institutional investor's ownership, and to offer stock option plans for their executives. These findings shed the light on the corporate governance features that enhance incentives for voluntary earnings disclosures and those affecting these incentives under high ownership concentration.

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Review of Accounting and Finance, vol. 4 no. 3
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 13 January 2023

Ricky Chung, Lyndie Bayne and Jacqueline Louise Birt

The authors examine the determinants of ESG disclosure and differentiate between voluntary and mandatory disclosure regimes in Hong Kong.

2940

Abstract

Purpose

The authors examine the determinants of ESG disclosure and differentiate between voluntary and mandatory disclosure regimes in Hong Kong.

Design/methodology/approach

The authors analyse both Bloomberg ESG scores and a disclosure index score, manually constructed according to the 2019 Hong Kong Exchange ESG Guide using regression tests.

Findings

The results indicate that the level of concentrated ownership is negatively associated with the quantity of ESG disclosure only in the voluntary disclosure period, suggesting that agency problems are alleviated when ESG reporting is mandatory. The findings also show that larger firms significantly disclose higher levels of ESG information in both voluntary and mandatory disclosure periods. Furthermore, the extent of ESG disclosure significantly increases when firms' sustainability reports are audited by Big 4 accounting firms only in the voluntary disclosure period. Finally, the control variables are significantly related to the level of ESG disclosure showing that ESG disclosure increased over time and is significantly different among industries.

Originality

The authors make contributions to the literature on non-financial disclosure in relation to ESG reporting by examining the relationship between firm characteristics and ESG disclosure in the Hong Kong context under both voluntary and mandatory disclosure regimes. This study also provides important implications for other stock markets and relevant stakeholders including preparers, users and the sustainability profession.

Details

Journal of Applied Accounting Research, vol. 25 no. 4
Type: Research Article
ISSN: 0967-5426

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