Financial analysts' reaction to voluntary integrated reporting: cross-sectional variation in institutional enforcement contexts

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Francesca Rossignoli ◽  
Riccardo Stacchezzini ◽  
Alessandro Lai
Keyword(s):  
Institutional Setting ◽  
Institutional Characteristics ◽  
Unique Contribution ◽  
Integrated Reporting ◽  
Content Type ◽  
Institutional Settings ◽  
Country Level ◽  
Eu Directive ◽  
Sustainability Disclosure ◽  
Moderating Role

PurposeEuropean countries are likely to increasingly adopt integrated reporting (IR) voluntarily, after the 2014/95/EU Directive is revised and other initiatives are implemented. Therefore, the present study provides insights on the relevance of IR in voluntary contexts by exploring analysts' reactions to the release of integrated reports in diverse institutional settings.Design/methodology/approachDrawing on voluntary disclosure theory, a quantitative empirical research method is used to explore the moderating role of country-level institutional characteristics on the associations between voluntary IR release and analyst forecast accuracy and dispersion.FindingsIR informativeness is not uniform in the voluntary context and institutional settings play a moderating role. IR release is associated with increased consensus among analyst forecasts. However, in countries with weak institutional enforcement, a reverse association is detected, indicating that analysts rely largely on IR where the institutional setting strongly protects investors. Although a strong institutional setting boosts the IR release usefulness in terms of accuracy, it creates noise in analyst consensus.Research limitations/implicationsAcademics can appreciate the usefulness of voluntary IR across the institutional enforcement contexts.Practical implicationsManagers can use these findings to understand opportunities offered by IR voluntary release. The study recommends that policymakers, standard setters and regulators strengthen the institutional enforcement of sustainability disclosure.Originality/valueThis study is a unique contribution to recent calls for research on the effects of nonfinancial disclosure regulation and on IR “impacts”. It shows on the international scale that IR usefulness for analysts is moderated by institutional patterns, not country-level institutional characteristics.

scholarly journals Integrated reporting and analyst behaviour in diverse institutional settings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Francesca Rossignoli ◽  
Riccardo Stacchezzini ◽  
Alessandro Lai
Keyword(s):  
Voluntary Disclosure ◽  
Environmental Governance ◽  
Forecast Accuracy ◽  
Institutional Setting ◽  
Analyst Forecast ◽  
Integrated Reporting ◽  
Content Type ◽  
Institutional Settings ◽  
Moderating Role

Purpose Given the limited studies that have started to focus on contexts where integrated reporting (IR) is voluntarily adopted, this paper aims to explore the moderating role of institutional characteristics on the association between voluntary report release and analyst forecast accuracy. Design/methodology/approach This study uses a quantitative empirical research method grounded on voluntary disclosure theory to provide empirical evidence on an international sample of companies choosing to release integrated reports. Preliminarily, a cluster analysis is used to group countries according to institutional patterns. Multivariate analyses detect the associations between report release choice and analysts’ forecast accuracy across clusters. Multiple econometric approaches are used to address the endogeneity concerns. Findings IR release is not informative for the market unless considering systematic variations across different institutional settings. Analysts’ forecast is more accurate for IR adopters located in strong institutional enforcement settings than for all the other companies. In the strong institutional setting that is also characterized by a pluralistic society, IR release benefits for the market are conditioned by the fact that the choice to release IR depends on environmental, governance and social disclosure-based managers remuneration and disclosure requirements. In weak institutional settings, IR release is not beneficial for the forecast accuracy. Research limitations/implications Academics and practitioners can gain understanding of the usefulness of voluntary IR across different institutional settings. Originality/value The study advances the understanding of the IR’s informativeness, overcoming the common dichotomous distinctions between strong and weak institutional settings.

Policy and institutions facilitating entrepreneurial spin-offs: USA, Asia and Europe

2014 ◽  
Vol 3 (2) ◽  
pp. 186-196 ◽  
Author(s):  
Rosa Caiazza ◽  
David Audretsch ◽  
Tiziana Volpe ◽  
Julie Debra Singer
Keyword(s):  
Institutional Setting ◽  
Policy Debate ◽  
Content Type ◽  
Factors Affecting ◽  
Institutional Settings ◽  
The Usa ◽  
New Perspective ◽  
National Analysis ◽  
The Impact ◽  
Cross National

Purpose – Existing work documents the role that institutional setting plays in the process of spin-off creation. However, despite decades of studies, scholars have not clearly explained why some regions are more involved in spin-off activity than others. Drawing from institutional theory, the purpose of this paper is to compare different institutional settings identifying factors affecting the general environment capability to support spin-off activity of a specific region. Design/methodology/approach – The authors utilize a cross-national analysis of American, Asian, and European areas identifying factors affecting their different rate of spin-off activity. This study contributes to the policy debate concerning entrepreneurship and how best to spur spin-off activities. Findings – In this paper, the authors identify the general and specific factors that explain the cross-national diversity in spin-off creation. The authors then perform an analysis of the impact of these factors in various regions of the USA, Asia, and Europe, providing evidence for the necessity of specific combinations of these factors. Originality/value – The paper offers a new perspective on the causes of spin-offs through a cross-national analysis of many areas around the world.

Developing trust through stewardship

2019 ◽  
Vol 20 (1) ◽  
pp. 11-39 ◽  
Author(s):  
John Dumay ◽  
Matteo La Torre ◽  
Federica Farneti
Keyword(s):  
Agency Theory ◽  
Positive Impact ◽  
Stewardship Theory ◽  
Extended Model ◽  
Corporate Disclosure ◽  
Integrated Reporting ◽  
Content Type ◽  
Eu Directive ◽  
Management Behaviour ◽  
Corporate Disclosures

Purpose This paper examines the gap between reporting and managers’ behaviour to challenge the current theoretical underpinnings of intellectual capital (IC) disclosure practice and research. The authors explore how the key features from IC and integrated reporting can be combined to develop an extended model for companies to comply with EU Directive 2014/95/EU and increase trust in corporate disclosures and reports. Design/methodology/approach This essay relies on academic literature and examples from practice to critique the theories that explain corporate disclosure and reporting but do not change management behaviour. Based on this critique, the authors argue for a change in the fundamental theories of stewardship to frame a new concept for corporate disclosure incorporating using a multi-capitals framework. Findings We argue that, while the inconsistency between organisations’ reporting and behaviour persists, increasing, renewing or extending the information disclosed is not enough to instil trust in corporations. Stewardship over a company’s resources is necessary for increasing trust. The unanticipated consequences of dishonest behaviour by managers and shareholders compels a new application of stewardship theory that works as an overarching guide for managerial behaviour and disclosure. Emanating from this new model is a realisation that managers must abandon agency theory in practice, and specifically the bonus contract. Research limitations/implications We call for future empirical research to explore the role of stewardship theory within the dynamics of corporate disclosure using the approach. The research implications of those studies should incorporate the potential impacts on management behaviours within a stewardship framework and how those actions, and their outcomes, are disclosed for rebuilding public trust in business. Practical implications The implications for integrated reporting and reports complying with the new EU Directive are profound. Both instruments rely on agency theory to coax managers into reducing information asymmetry by disclosing more. However, agency theory only re-affirms the power managers have over corporate information. It does not change their behaviour, nor to act in the interest of all stakeholders as the stewards of an organisation’s resources. Social implications We advocate that, in business education, greater emphasis is needed on how stewardship has a more positive impact on management behaviour than agency, legitimacy and stakeholder theories. Originality/value We reflect on the current and compelling issues permeating the international landscape of corporate reporting and disclosure and explain why current theories which explain corporate disclosures do not change behaviour or engender trust in business and offer an alternative disclosure model based on stewardship theory.

Using the International Integrated Reporting Framework to comply with EU Directive 2014/95/EU: can we afford another reporting façade?

2020 ◽  
Vol 28 (5) ◽  
pp. 889-914 ◽  
Author(s):  
Lucia Biondi ◽  
John Dumay ◽  
David Monciardini
Keyword(s):  
Environmental Sustainability ◽  
National Level ◽  
Secondary Data ◽  
Integrated Reporting ◽  
Environmental Implications ◽  
Reporting Standard ◽  
Content Type ◽  
Eu Directive ◽  
Reporting Framework ◽  
The Eu

Purpose Motivated by claims that the International Integrated Reporting Framework (IRF) can be used to comply with Directive 2014/95/EU (the EU Directive) on non-financial and diversity disclosure, the purpose of this study is to examine whether companies can comply with corporate reporting laws using de facto standards or frameworks. Design/methodology/approach The authors adopted an interpretivist approach to research along with current regulatory studies that aim to investigate business compliance with the law using private sector standards. To support the authors’ arguments, publicly available secondary data sources were used, including newsletters, press releases and websites, reports from key players within the accounting profession, public documents issued by the European Commission and data from corporatergister.com. Findings To become a de facto standard or framework, a private standard-setter requires the support of corporate regulators to mandate it in a specific national jurisdiction. The de facto standard-setter requires a powerful coalition of actors who can influence the policymakers to allow its adoption and diffusion at a national level to become mandated. Without regulatory support, it is difficult for a private and voluntary reporting standard or framework to be adopted and diffused. Moreover, the authors report that the <IRF> preferences stock market capitalism over sustainability because it privileges organisational sustainability over social and environmental sustainability, emphasises value creation over holding organisations accountable for their impact on society and the environment and privileges the entitlements of providers of financial capital over other stakeholders. Research limitations/implications The authors question the suitability of the goals of both the <IRF> and the EU Directive during and after the COVID-19 crisis. The planned changes to both need rethinking as we head into uncharted waters. Moreover, the authors believe that the people cannot afford any more reporting façades. Originality/value The authors offer a critical analysis of the link between the <IRF> and the EU Directive and how the <IRF> can be used to comply with the EU Directive. By questioning the relevance of the compliance question, the authors advance a critique about the relevance of these and other legal and de facto frameworks, particularly considering the more pressing needs that must be met to address the economic, social and environmental implications of the COVID-19 crisis.

Impacts of regulatory focus and institutions on innovation

2018 ◽  
Vol 56 (5) ◽  
pp. 939-954 ◽  
Author(s):  
Birton J. Cowden ◽  
Joshua S. Bendickson
Keyword(s):  
Regulatory Focus ◽  
New Ventures ◽  
New Venture ◽  
Institutional Setting ◽  
Prevention Focus ◽  
Content Type ◽  
Institutional Settings ◽  
Cognitive Motivations ◽  
The Impact ◽  
Shed Light

Purpose Many factors influence entrepreneurs, some of which influence the level of innovation (i.e. innovative or imitative) of new products or services pursued. The purpose of this paper is to explore the impact of the psychological motivations of the entrepreneurs and their institutional setting on the innovativeness of the new venture they pursue. Through this exploration, we can gain a better understanding of how innovative new ventures still occur in varying institutional environments. Design/methodology/approach In order to deliver the authors’ propositions as they pertain to innovation, the authors review the literature on entrepreneurs’ default regulatory focus (i.e. promotion or prevention seeking) and the strength of the institutions in which they are operating. Findings The authors theorize that promotion focus enhances innovativeness of ventures while prevention focus enhances imitativeness of ventures. The authors also provide a conceptual framework for the interplay among institutions and regulatory focus and provide a typology for how these varying combinations impact innovativeness or imitativeness of venture type. Originality/value In this study, the authors discuss and unpack the entrepreneurial mindset in order to bridge gaps between institutions and cognitive motivations of entrepreneurs as they pertain to innovativeness of venture type. By synthesizing several areas of research, the authors shed light on entrepreneurs’ innovativeness by proposing how these factors work together in determining whether an entrepreneur’s venture is more or less innovative based on regulatory disposition and in different institutional settings.

Institutional characteristics of education systems and inequalities: Introduction II

2021 ◽  
pp. 002071522110615
Author(s):  
Christiane Gross ◽  
Andreas Hadjar ◽  
Laura Zapfe
Keyword(s):  
Education System ◽  
Institutional Setting ◽  
Institutional Characteristics ◽  
Education Systems ◽  
Comparative Sociology ◽  
Institutional Settings ◽  
Current State ◽  
Key Driver ◽  
State Of Research

The second special issue of International Journal of Comparative Sociology (IJCS) on the role of education systems as institutional settings on the reproduction of inequalities includes three papers that focus on stratification of the education system as key driver of educational inequalities, the role of digital inequalities in the school and beyond, as well as how students navigate through the institutional setting of the Taiwanese education system. While we already elaborated on the research program, conceptual framework, and methodological challenges in the first introduction (published in January 2021), we will deal with the current state-of-research in this second introduction.

The diffusion and adoption of integrated reporting: a cross-country analysis on the determinants

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Megawati Oktorina ◽  
Sylvia Veronica Siregar ◽  
Desi Adhariani ◽  
Aria Farah Mita
Keyword(s):  
Empirical Evidence ◽  
Diffusion Of Innovation ◽  
Disclosure Quality ◽  
Integrated Reporting ◽  
Diffusion Of Innovation Theory ◽  
Content Type ◽  
Corporate Reporting ◽  
Country Level ◽  
Reporting Framework ◽  
New Entrants

Purpose This study aims to provide empirical evidence on the determinants of voluntary integrated reporting (<IR>) disclosure quality. Design/methodology/approach The samples include companies from the Integrated Reporting Examples Database on the International Integrated Reporting Committee’s (IIRC) website, except South Africa and Brazil, where reporting is mandatory. The final sample includes 29 countries, with 148 companies and 592 observations for the study period 2014–2017. Content analysis is used to measure <IR> disclosure quality derived from the <IR> principles and elements published by IIRC (2013). The fraction regression probit model is used to test the proposed hypothesis. Findings This study provides empirical evidence that competition from new entrants and country-level accounting competence encourage companies to implement the International Integrated Reporting Framework (IIRF). Signaling theory and diffusion of innovation theory can be used to explain this association. Meanwhile, product market competition of existing rivals has been found to reduce the adoption of the <IR> framework, which is consistent with the proprietary cost theory. Finally, this study finds that company reputation does not affect voluntary <IR> disclosure quality. Research limitations/implications This study did not examine the barriers to entry to explain the effect of competition from new entrants as a possible determinant of <IR> disclosure quality. Furthermore, the inclusion of <IR> in the accounting curriculum of universities and certification bodies in certain countries has not been considered as a control variable. The results might also be limited to companies that voluntarily submitted into the Integrated Reporting Examples Database on the IIRC website. All these limitations provide ample avenues for future research. Practical implications This research provides implications for governments and standard setters to further sharpen the competence of accountants through memberships in professional accountancy organisations or through training and seminars related to <IR>. The results also suggest that universities should include the topic of <IR> in the accounting program curriculum to increase the understanding of prospective accountants about this reporting regime. The results also show differences on the impact of competition between new entrants and existing rivals on <IR> disclosure quality. This can be used by IIRC or other standard setters to predict the <IR adoption>. Originality/value This study uses the diffusion of innovation theory to explain the association between country-level accounting competence and <IR> disclosure quality. Few studies have researched this association. The results show that a country’s accounting competence increases the application of the IIRF in corporate reporting. <IR> has been considered an innovation in corporate reporting and can be implemented by the company if its professional accountants have enough knowledge of this reporting framework.

scholarly journals Rhetorical impression management in the letter to shareholders and institutional setting

2017 ◽  
Vol 30 (2) ◽  
pp. 404-432 ◽  
Author(s):  
Walter Aerts ◽  
Beibei Yan
Keyword(s):  
Impression Management ◽  
Text Analysis ◽  
Institutional Environment ◽  
Institutional Setting ◽  
Litigation Risk ◽  
Content Type ◽  
Linguistic Style ◽  
Country Level ◽  
The Us ◽  
Institutional Differences

Purpose Using composite style measures of the letter to shareholders, the purpose of this paper is to elaborate dominant rhetorical profiles and qualify them from an impression management (IM) perspective. In addition, the paper examines how institutional differences affect rhetorical profiles by comparing intensity and contingencies of rhetorical profiles of UK and US companies. Design/methodology/approach The authors use automated text analysis to capture linguistic style characteristics of a panel of UK and US companies and employ factor analysis to determine rhetorical profiles. Next, the authors investigate company-level and country-level determinants of a company’s rhetorical stance. Findings The authors document three prominent rhetorical profiles: an emphatic acclaiming stance, a cautious plausibility-based framing position, and a logic-based rationalizing orientation. The profiles represent distinct self-presentational logics and have different readability effects. Rhetorical IM is stronger in US companies, but higher expected scrutiny in the US institutional environment affects sensitivity of rhetorical postures to message credibility and litigation risk, while marginally increasing the less litigation-sensitive defensive framing style in US letters. Originality/value The authors develop replicable archival-based measures of prominent rhetorical IM traits of the shareholder letter, based on composite style features. The authors argue that they are qualitatively different from content-based IM proxies. The authors investigate their institutional and organizational relevance by examining how company features and country-level differences affect incentives and constraints for style-based rhetorical IM.

Media reputation: a source of banks' financial performance

2020 ◽  
Vol 38 (6) ◽  
pp. 1399-1419 ◽  
Author(s):  
Ngoc Thang Doan ◽  
Dung Phuong Hoang ◽  
Anh Hoang Thi Pham
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Fixed Effects ◽  
Positive Impact ◽  
Institutional Setting ◽  
Content Type ◽  
Institutional Settings ◽  
Research Findings ◽  
The Media ◽  
Media Reputation

PurposeBased on the resource-based view (RBV) and the signaling theory, this paper examines the effect of media reputation on financial performance as well as the moderating role of bank characteristics (risk management and financial capacities) in this relationship, using Vietnamese commercial bank data for the period 2007–2018.Design/methodology/approachWe rely on the agenda-setting theory to measure the media reputation of banks. Return on average equity (ROE) is used as a proxy of financial performance. We regress financial performance on media reputation with fixed effects to control unobserved variables. In addition, the instrumental variable (IV) method is applied to deal with the endogeneity problem. We use the change in bank logo as an IV for media reputation.FindingsWe find that media reputation has a positive effect on financial performance. This effect becomes prominent for large banks, listed banks or banks that demonstrate good risk management capacities, and is particularly strong when we control for endogeneity bias. The effect of media reputation on financial performance is transmitted through the non-performing loan (NPL) channel.Research limitations/implicationsThe research findings further endorse the positive impact of media reputation on financial performance in the low-quality institutional settings. Moreover, these findings expand the existing knowledge regarding the relationship between media reputation and financial performance by affirming two strategies which could be used to leverage the contribution of media reputation including improving banks' risk management capacities and raising financial capital.Originality/valueThis is the first known paper to examine the effect of media reputation on financial performance in commercial banks in an underdeveloped institutional setting while exploring the moderators in this relationship. This study, therefore, provides insightful implications for different bank segments in managing NPL and taking advantage of media reputation as a potential resource of financial performance.

Informal institutions and technology use by entrepreneurs

2016 ◽  
Vol 11 (1) ◽  
pp. 57-71 ◽  
Author(s):  
Saurav Pathak ◽  
Andre O. Laplume ◽  
Emanuel Xavier-Oliveira
Keyword(s):  
Emerging Economies ◽  
Technology Use ◽  
Shadow Economy ◽  
Informal Institutions ◽  
Unique Contribution ◽  
Content Type ◽  
Negatively Associated ◽  
Individual Level ◽  
Country Level

Purpose – Given the increasing relevance of emerging economies in the global economy and the neoclassical argument that technological progress is the main driver of economic growth, the purpose of this paper is to investigate the under-researched role of informal institutions on the likelihood that individuals will enter into technology entrepreneurship in emerging markets. Design/methodology/approach – Since the authors combined individual-level and country-level observations, data were analyzed employing hierarchical linear modeling methods and random-effect logistic regressions to estimate the influence of country-level factors on the likelihood of individuals’ entry into techno-entrepreneurship. The data set comprised 10,280 observations for 18 emerging countries during the 2002-2008 period. Findings – The selected informal institutions relate to techno-entrepreneurship as follows: the size of the shadow economy has a U-shaped relationship; ethnic diversity is positively associated; and ethnic polarization is negatively associated, though the latter is not significant. Research limitations/implications – The authors did not theorize on cross-level mechanisms through which these informal institutions could influence individual-level attitudes, nor did the authors assess the role of such institutions on general entrepreneurship. However, this paper provides a base for more fine-grained studies. Originality/value – The authors disseminate novel insights into the particularities of emerging economies since all informal institutions studied here have been negatively associated with the overall economic experiences of developing and least developed countries. In addition, the authors provide a unique contribution by identifying a potential U-shaped relationship between the size of the shadow economy and the likelihood of individuals engaging in techno-entrepreneurship.

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