Toward a Positive Theory of Disclosure Regulation: In Search of Institutional Foundations

2013 ◽  
Vol 88 (3) ◽  
pp. 789-824 ◽  
Author(s):  
Jeremy Bertomeu ◽  
Edwige Cheynel
Keyword(s):  
Voluntary Disclosure ◽  
Accounting Standards ◽  
Professional Organization ◽  
Accounting Choice ◽  
Unified Framework ◽  
Positive Theory ◽  
Voluntary Disclosures ◽  
Bargaining Process ◽  
Disclosure Rules ◽  
Institutional Foundations

ABSTRACT This article develops a theory of standard-setting in which accounting standards emerge endogenously from an institutional bargaining process. It provides a unified framework with investment and voluntary disclosure to examine the links between regulatory institutions and accounting choice. We show that disclosure rules tend to be more comprehensive when controlled by a self-regulated professional organization than when they are under the direct oversight of elected politicians. These institutions may not implement standards desirable to diversified investors and, when voluntary disclosures are possible, allowing choice between competing standards increases market value over a single uniform standard. Several new testable hypotheses are also offered to explain differences in accounting regulations. JEL Classifications: C78; D02; D04; D71; D72; D79; G28; L51; M41; M48.

A Rationale for Imperfect Reporting Standards

2021 ◽  
Author(s):  
Henry L. Friedman ◽  
John S. Hughes ◽  
Beatrice Michaeli
Keyword(s):  
Financial Reporting ◽  
Private Information ◽  
Voluntary Disclosure ◽  
Accounting Standards ◽  
Direct Costs ◽  
General Purpose ◽  
Mandatory Reporting ◽  
Comparative Statics ◽  
Voluntary Disclosures ◽  
Financial Reports

The aim of general purpose financial reporting is to provide information that is useful to investors, lenders, and other creditors. With this goal, regulators have tended to mandate increased disclosure. We show that increased mandatory disclosure can weaken a firm’s incentive to acquire and voluntarily disclose private information that is not amenable to inclusion in mandated reports. Specifically, we provide conditions under which a regulator, seeking to maximize the total amount of information provided to investors via both mandatory and voluntary disclosures, would mandate less informative and more conservative financial reports even in the absence of any direct costs of increasing informativeness. This result is robust to allowing the firm to make reports more informative and to imposing a nondisclosure cost or penalty on the firm. The results and comparative statics analysis contribute to our understanding of interactions between mandatory reporting and voluntary disclosure and demonstrate a novel benefit to setting accounting standards that mandate imperfectly informative reports. This paper was accepted by Suraj Srinivasan, accounting.

A positive theory of flexibility in accounting standards

2008 ◽  
Vol 46 (2-3) ◽  
pp. 312-333 ◽  
Author(s):  
Ronald A. Dye ◽  
Sri S. Sridhar
Keyword(s):  
Accounting Standards ◽  
Positive Theory

Intellectual Capital Disclosure in Sustainability Reports

2013 ◽  
pp. 195-214 ◽  
Author(s):  
Giovanni Bronzetti ◽  
Romilda Mazzotta ◽  
Graziella Sicoli ◽  
Maria Assunta Baldini
Keyword(s):  
Content Analysis ◽  
Intellectual Capital ◽  
Voluntary Disclosure ◽  
Information Disclosure ◽  
Listed Companies ◽  
Global Reporting Initiative ◽  
Voluntary Disclosures ◽  
Sustainability Reports ◽  
Sustainability Report

The purpose of this chapter is to analyze the level and the quality of voluntary disclosures of Intellectual Capital (IC) in the sustainability reports on a sample of Italian listed companies. The authors conducted an analysis of twelve sustainability reports for two years (2009-2010). These are related to six firms selected among the most capitalized 37 Italian listed companies. To investigate the “level of disclosure,” the authors identified the presence of IC information, while to evaluate the “IC quality,” they constructed a voluntary disclosure index based on content analysis. IC information disclosure is more likely present in sustainability reports of firms with a higher levels of application of the Global Reporting Initiative framework. The results confirm that the sustainability report can adequately represent the intellectual capital, especially in order to understand its role in the firm and the interaction with other variables present in the firm.

Voluntary disclosures practices of family firms in Australia

2019 ◽  
Vol 32 (2) ◽  
pp. 273-294
Author(s):  
Judy Louie ◽  
Kamran Ahmed ◽  
Xu-Dong Ji
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Best Practice ◽  
Family Firms ◽  
Current Knowledge ◽  
Strategic Decisions ◽  
Voluntary Disclosures ◽  
Content Type ◽  
Practice Recommendations ◽  
Good Corporate Governance

Purpose This paper aims to examine the voluntary disclosure practices of family and non-family listed firms and whether family firms have improved their disclosure practices following the introduction of the Principles of Good Corporate Governance and Best Practice Recommendations in 2003 in Australia. Design/methodology/approach Voluntary disclosures are measured by constructing an index specifically for this study. Such indexes consist of corporate governance disclosure, strategic disclosure and future disclosures. They are then regressed on firm-specific variables while controlling for family and non-family firms. A total of 60 family firms and 60 non-family firms in Australia are randomly chosen from 2001 to 2006 for examining their disclosure practices. Findings The research findings show that family firms disclose information voluntarily to signal to the market regarding their growth potentials and abide by government regulations to improve their reputation. Despite the fact that compliance with the Principles of Good Corporate Governance and Best Practice Recommendations was not compulsory, this paper finds that the recommendation encouraged family and non-family firms to disclose more corporate governance information. Practical implications The findings from this research will help investors and regulators make more strategic decisions on investments and regulations respectively in family firms. Originality/value There has been limited empirical evidence on the disclosure practices and their determinants of family firms in Australia. The study will thus significantly contribute to the current knowledge in this regard.

Voluntary disclosures and market response to earnings announcements

2018 ◽  
Vol 17 (1) ◽  
pp. 2-17 ◽  
Author(s):  
Guy Dinesh Fernando ◽  
Justin Giboney ◽  
Richard A. Schneible
Keyword(s):  
Information Asymmetry ◽  
Stock Returns ◽  
Information Content ◽  
Voluntary Disclosure ◽  
Stock Price ◽  
Trading Volume ◽  
Voluntary Disclosures ◽  
Release Date ◽  
Price Movement ◽  
Content Type

Purpose The aim of this paper is to investigate the impact of voluntary disclosure on information asymmetry between investors and the average information content of subsequent the earnings announcement. Design/methodology/approach The authors use empirical methodology relying on multiple regression analyses. The authors estimate models of trading volume and stock returns around the earnings’ release date as a function of voluntary disclosures, measured using information in the 8-K statements. Findings Voluntary disclosures prior to the earnings release date increase trading volume related to stock returns. In addition, voluntary disclosures also reduce stock price movement around that date. Research limitations/implications The results indicate that voluntary disclosures increase trading volume related to stock returns around the earnings release date. Such increases indicate increased differential precision among investors, demonstrating that voluntary disclosures increase differences in opinion among investors. The reduced stock price movement around the earnings release date also show that voluntary disclosures reduce the information content of earnings. One limitation is that the measure of voluntary disclosures does not consider the variation in the information content of individual disclosures. Practical implications Firms who make voluntary disclosures will need to carefully consider how to structure such releases to minimize asymmetry between investors. Investors should pay greater attention to finding out, and interpreting, voluntary disclosures by firms. Social implications Regulators have previously expressed concern about leveling the playing field between more and less informed investors. The results showing increased differences in information as a result of voluntary disclosures provide valuable insights as regulators debate the balance of mandated and voluntary disclosure. Originality/value This is the first study to investigate the effect of voluntary disclosures on information asymmetry among investors using trading volume and, consequently, the first to find increased differences among investors that result from those voluntary disclosures. The paper is also the first to use a direct measure of voluntary disclosure developed by Cooper et al. to demonstrate the negative relation between voluntary disclosure and the average informativeness of earnings announcements.

scholarly journals Corporate Governance Mechanisms and Voluntary Disclosure

2020 ◽  
Vol 11 (2) ◽  
pp. 82
Author(s):  
Erwin Saraswati ◽  
Alfizah Azzahra ◽  
Ananda Sagitaputri
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Family Firms ◽  
Stock Exchange ◽  
Annual Reports ◽  
Corporate Disclosure ◽  
Governance Mechanisms ◽  
Voluntary Disclosures ◽  
Corporate Governance Mechanisms ◽  
New Evidence

Corporate disclosure and corporate governance are two inseparable instruments of investor protection. This research sought to find evidence on how corporate governance mechanisms affect the extent of voluntary disclosures. Voluntary disclosures were measured using content analysis on published annual reports. The sample of this research consisted of 81 firm-year observations from 27 firms of consumer goods sector listed on Indonesian Stock Exchange from 2016 to 2018. Using multiple regression method, the result has shown that board size and board independence increase voluntary disclosures, indicating that the commissioners have effectively represented the interests of shareholders by monitoring and encouraging the management to increase disclosure. This research provided new evidence that family ownership increases voluntary disclosure, suggesting that family firms are more concerned by the costs of non-disclosure. Meanwhile, institutional ownership does not significantly affect voluntary disclosure. 

scholarly journals Peranan Karakteristik Dewan Direksi dan Struktur Kepemilikan dalam Pengungkapan Sukarela Perusahaan Publik Indonesia

2021 ◽  
Vol 9 (3) ◽  
Author(s):  
Jessica Yeo ◽  
Meiliana Suparman
Keyword(s):  
Board Of Directors ◽  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Stock Exchange ◽  
Secondary Data ◽  
Institutional Ownership ◽  
Size Composition ◽  
Fixed Effect Model ◽  
Foreign Ownership ◽  
Voluntary Disclosures

The objective of this study is to demonstrate that characteristics of the board of directors and ownership structure influence the level of voluntary disclosure. Board of directors’ characteristics include the board's size, composition, frequency of meetings, gender, expertise, and compensation. These attributes reflect the ownership structure, which includes foreign ownership, institutional ownership, and director ownership. Control variables include company size, firm age, leverage, profitability, and liquidity. This study utilized secondary data from 52 consumer goods companies listed on the Indonesia Stock Exchange for the period 2016 to 2020. In total, 228 observations were tested for hypotheses, after 32 outliers were removed from the data. The hypotheses were tested using panel regression with a Fixed Effect Model (FEM). The study found that all independent variables simultaneously have a significant impact on voluntary disclosures. According to the partial test (t-test), only the remuneration of directors and institutional ownership had a significant and positive effect on voluntary disclosures, while other variables had no significant impact. In addition, the foreign ownership variable had a significant affect on voluntary disclosure, however the direction is negative.

scholarly journals Pengaruh Efektivitas Komite Audit, Efektivitas Internal Audit dan Kualitas Audit terhadap Pengungkapan Sukarela

2020 ◽  
Vol 30 (4) ◽  
pp. 861
Author(s):  
Hanny Purnomo ◽  
Yustrida Bernawati
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Internal Audit ◽  
Sampling Technique ◽  
Voluntary Disclosures ◽  
Purposive Sampling

The purpose of this study is to prove the truth, internal audit, internal audit, and audit quality on voluntary disclosures in companies listed on the Indonesia Stock Exchange for the period of 2016-2018. The sample was selected using a purposive sampling technique to obtain a sample of 100 companies, the hypothesis was taken using multiple linear regression. The results of this study prove the importance of audit audits, internal audits, and audit quality applied to company voluntary disclosures. Keywords: Effectiveness of Audit Committee; Internal Audit; Audit Quality; Voluntary Disclosure.

Cross-Listings and Voluntary Disclosure: International Evidence

2019 ◽  
Vol 4 (2) ◽  
pp. 89-113 ◽  
Author(s):  
Long Chen ◽  
Yashu Dong ◽  
Jeff Ng ◽  
Albert Tsang
Keyword(s):  
Voluntary Disclosure ◽  
Accounting Standards ◽  
Institutional Ownership ◽  
Management Forecasts ◽  
Listed Firms ◽  
International Evidence ◽  
Management Forecast ◽  
Cross Listing ◽  
International Setting ◽  
Foreign Institutional Investors

This paper examines changes in firms' disclosure behavior around cross-listings. Using an international setting, we find significant differences in management forecast likelihood and frequency between cross-listed firms and firms with similar characteristics but that are not cross-listed; particularly when differences in accounting standards between a cross-listed firm's home and target countries are larger. Further, we find that firms choosing to cross-list in target countries with larger accounting standards differences tend to provide more voluntary disclosure during the two years preceding a new cross-listing, rather than during the earlier time periods or the period after cross-listing, and such voluntary disclosure helps firms attract more foreign institutional ownership in their cross-listing target countries. Collectively, our evidence suggests that although differences in accounting standards across countries deter firms' cross-listing activities, cross-listed firms, by providing more management forecasts voluntarily, preemptively alleviate the information disadvantage faced by foreign institutional investors.

Debt and Voluntary Disclosure

2020 ◽  
Author(s):  
Anne Beyer ◽  
Ronald A. Dye
Keyword(s):  
Linear Combination ◽  
Voluntary Disclosure ◽  
Voluntary Disclosures ◽  
Debt Contracts ◽  
Equity Prices ◽  
Market Prices ◽  
Positive Weight ◽  
Enterprise Value ◽  
Debt Level ◽  
A Company

This paper studies equilibrium voluntary disclosures for a company financed with both debt and equity, where the firm's manager is compensated based on a linear combination of the market prices of the firm's equity and enterprise values (i.e., the sum of the values of its equity and debt). Such compensation policies span "all equity" contracts, "all debt" contracts, and "all enterprise value" contracts. We show: 1. under both "all equity" and "all debt" contracts, increased debt always leads to reduced voluntary disclosure; 2. under "all enterprise value" contracts, increased debt has no effect on voluntary disclosure; 3. for all contracts that place positive weight on both equity and enterprise values, more debt leads to less (resp., more) disclosure if the initial debt level is low (resp., high); 4. increasing the weight on equity prices always induces less disclosure, so: 5. "all equity" contracts minimize, and "all debt" contracts maximize, disclosure.

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