The Shape of Water: Analysis of Corporate Water Disclosure in Indonesia

Indonesia is facing a water crisis in terms of the scarcity and quality of its water resources. Considering this water-constrained future, it is important that several parties, including companies in Indonesia as one of the significant actors, pay attention to the pristine management and reporting of this scarce resource. This study evaluates the reporting and disclosure requirements of water of Indonesian listed companies in 2014 - 2016. Content analysis was used as the research method to analyse the water disclosure and to evaluate the adequacy of the disclosure against the global disclosure requirement from the Global Reporting Initiative (GRI) G4. The findings of the study show that most of the companies have illustrated the commitment toward water stewardship by reporting on water-related aspects. However, when compared to the global standard, the level of disclosure is still low, which might reflect the lack of demand from stakeholders or the low necessity to seek legitimacy from water reporting. This also implies future opportunities for companies to better perform water management and present a more complete water disclosure for stakeholders.

Accuracy of Disclosure Environment and Subsidies for Foreign Investments

Countries often offer substantial financial incentives (subsidies) for attracting foreign investments as new ventures, often with mixed results. Discussion to support foreign investment seldom includes improvement of the reporting and disclosure environment. When financial markets get integrated, but the accounting institutions and disclosure environment significantly differ, investment in a market with a relatively lax disclosure requirement may be construed by the investors as an attempt to avoid the due scrutiny of the asset’s performance, leading to a lower valuation. If so, financial incentives would tend to offset such a disincentive in addition to providing other incentives. The results of this study show that an improvement in accuracy of the audit/disclosure regime reduces the demand for subsidy. Therefore, the countries may find it more economical to compete for foreign investments on the basis of a more detailed and rigorous audit/disclosure environment instead of only relying upon the levels of fiscal incentives. Uniform adoption of accounting standards, such as the International Financial Reporting Standards (IFRS), may help accomplish such an objective. Therefore, fiscal incentives, though important, should not be viewed in isolation. A more economical solution may include development of a strong financial disclosure and auditing environment besides offering of a fiscal subsidy.

Balancing Expressiveness and Inexpressiveness in View Design

We study the design of data publishing mechanisms that allow a collection of autonomous distributed datasources to collaborate to support queries. A common mechanism for data publishing is via views: functions that expose derived data to users, usually specified as declarative queries. Our autonomy assumption is that the views must be on individual sources, but with the intention of supporting integrated queries. In deciding what data to expose to users, two considerations must be balanced. The views must be sufficiently expressive to support queries that users want to ask -- the utility of the publishing mechanism. But there may also be some expressiveness restriction. Here we consider two restrictions, a minimal information requirement, saying that the views should reveal as little as possible while supporting the utility query, and a non-disclosure requirement, formalizing the need to prevent external users from computing information that data owners do not want revealed. We investigate the problem of designing views that satisfy both an expressiveness and an inexpressiveness requirement, for views in a restricted declarative language (conjunctive queries), and for arbitrary views.

The Effect of an Auditor Identity Disclosure Requirement on Audit Quality: An Experimental Examination Incorporating the Incremental Effect of a Signature Requirement

SUMMARY After considering a proposal to require the engagement partner's signature on the audit report (PCAOB 2009), the Public Company Accounting Oversight Board chose instead to only require the disclosure of the engagement partner's name (PCAOB 2015). We make predictions regarding the effects of the two proposed requirements using insights from social norm theory, and test those predictions using an experimental audit market setting found in the literature. We find that both requirements reduce misreporting when compared to a control setting with neither requirement present. We also document that the signature requirement generates an incremental reduction in misreporting when added to the disclosure requirement. Finally, we provide evidence that these effects are driven by participants with higher sensitivity to social norms. This theory and evidence supports the new identity disclosure requirement at the PCAOB and helps explain the existence of signature requirements in many non-U.S. countries. Data Availability: Experimental data are available from the authors upon request.