Sustainability Report Evolution

This chapter is a unique case study that aims to present the evolution of non-financial reporting in Nestlé Portugal from 2007 to 2016 with the aim to study in-depth the Nestlé sustainability report practices. This study proposes to identify the key milestones in the evolution of this type of report, to compare with the disclosure strategy of Nestlé international, to understand if this company follow the IIRC guidelines, to identify the contribution of the audit by an independent entity, to conclude if Nestlé contributes to the achieving of United Nations Sustainable Development Goals, and to identify if the awards Nestlé received matter in its sustainability initiatives. Public institutional information was preferably used, particularly the sustainability report and integrated report, processed with various work tools using the technique of content analysis. The conclusions made it possible to understand that Nestlé emerges as a company that integrates these issues into its strategy and can be a model for companies that wish to follow this report path towards sustainability.

663“To tell or not to tell...” Practice of (non)disclosure and collusion of cancer in India

Introduction Collusion and concealing cancer diagnosis is often practiced in India. To get more insights on the perception and practice of disclosing cancer diagnosis, a qualitative study was conducted in south India. Methods In-depth interviews were conducted separately among women diagnosed with breast cancer and their caregivers. Prior permissions from hospital administration and ethical clearance was obtained. Using purposive sampling, 39 caregivers and 35 women diagnosed with breast cancer were recruited from tertiary care hospital. Results Families practiced collusion so as to protect the patient from emotional consequence viz. shock, fear of death and uncertainty about prognosis and treatment. This practice was more common among families who had patient with advanced stage of illness and/or 49 years of age and above. Collusion was mostly seen among Participants concealed the cancer diagnosis from social contacts such as extended family, friends and neighbor. Resultant codes pertaining to nondisclosure were; ‘too many questions’, ‘avoid courtesy visits’, ‘negative suggestions’, ‘perceived stigma’, ‘obstacle in child’s marriage’, and ‘shock’. Conclusions Disclosing cancer diagnosis is considered as ‘bad news’ however, withholding information about health status of patient is not ethically appropriate. Additionally, nondisclosure resulted in diminished support from social contacts. Concordance between cancer diagnosis and patients’ ability to deal with the information is important. Key messages Although nondisclosure of cancer diagnosis and prognosis violates patient autonomy, it was perceived to be beneficial for the patient. A pragmatic disclosure strategy complemented with tailored counselling would be a feasible paradigm.

Negative Tone and Readability in Management Discussion and Analysis Reports: Impact on The Cost of Debt

Companies use disclosure as a strategy to transfer and communicate selected information to stakeholders. This study examines the association between the firm's textual disclosure strategy and cost of debt by looking at the tone and readability of Management Discussion and Analysis (MDandA) reports and using a sample of 1596 Indonesian listed companies from all industries except the financial industry, from 2011 to 2018, and using ordinary least square (OLS) regression to test the research hypotheses. The findings suggest that both negative tone and poor readability level are associated positively with the cost of debt. This paper contributes to knowledge of the important aspects firms need to consider when setting their disclosure strategies, mainly how the tone and readability of firms' annual reports may be interpreted by users/creditors and affect the amount they will charge the firm for debt.

Disclosure to Regulate Learning in Product Markets from the Stock Market

A firm’s stock price may reveal information to a variety of participants, including its strategic partners and competitive rivals. This paper establishes that when a firm discloses cost information it can confound decision-relevant demand information embedded in the stock price that observers can otherwise extract. With stock price valuing firm profit (not cost and revenue separately), a disconnect is introduced between the firm’s actions and its intent – it discloses more (less) on one dimension when its intent is to conceal (reveal) on another. Moreover, the firm’s intent can be to either reveal or conceal information depending on what gives its partner the best competitive edge over its rival. Consequently, a firm’s disclosure is made strategically, incorporating valuation and competitive effects. Interestingly, the firm’s disclosure strategy is designed in close concert with its production decision, i.e., the firm’s optimal accounting and real decisions interact with each other for maximum impact.

The Pitfall of Selective Environmental Information Disclosure on Stock Price Crash Risk: Evidence From Polluting Listed Companies in China

Due to incomplete legal regulation, enterprises have the motive of selective environmental information disclosure (EID), and such selective disclosure strategy may result in stock price crash risk. In this study, the EID scores of China’s 1,010 polluting listed companies between 2007 and 2017 are first measured by employing the text analysis approach. Subsequently, we empirically examine the impacts of corporate’s selective EID on the stock price crash risk. The results indicate that EID of China’s polluting listed companies has significantly increased their stock price crash risk, rather than reducing it. Specifically, the EID of polluting companies with lower information efficiency, higher inefficient investment, higher degree of government control, and location in lower marketization areas is more likely to increase their stock price crash risk. Additional analyses reveal that the EID of polluting listed companies in China cannot reduce their stock price synchronization, which means that the selective disclosure of environmental information of China’s polluting listed companies is useless, and thus cannot reduce the risk of stock price crash.

Strategic Choice of Presentation Format: The Case of ETR Reconciliations

To minimize costs related to unfavorable perceptions of their tax-related activities, firms with low effective tax rates (ETR) could avoid, where possible, explicit mentions of their effective tax rates. Using this reputational cost perspective we study an item of required disclosure in the income tax footnote of the 10-K, the ETR reconciliation table, where firms can choose a presentation format that reveals the tax rate (the percentage format) or one that avoids explicit mention of the effective tax rate (the dollar format). We find that firms with low ETRs are 24 percent more likely to use the dollar format, and are also less likely to mention their tax rates elsewhere in their disclosures, consistent with the choice of dollar format reflecting a firm's overall tax disclosure strategy. Analysts' tax expense forecasts are less accurate for dollar format firms, suggesting higher processing costs associated with tax-related disclosures for these firms.

Developing a framework for carbon accounting disclosure strategies: a strategic reference points (SRP) matrix-based analysis

Purpose During the current century, environmental sustainability and waste reduction processes have always been subject to scrutiny in developed societies. Developed communities have gained considerable momentum by investing in environmental infrastructure and integrating corporate performance disclosure and less developed communities are involved with it. Carbon disclosure is one of the aspects of green accounting in “corporate strategies,” especially those operating across the capital market. Adherence to the disclosure of facts can facilitate sustainable development in societies. This study aims to present strategic reference points matrix-based model to develop a framework for carbon disclosure strategies through institutional and stakeholder pressures throughout the capital market. Design/methodology/approach As a case study, by reviewing similar research on carbon disclosure, this study seeks to illustrate various carbon disclosure aspects and strategies in a matrix based on institutional (vertical axis) and stakeholder (horizontal axis) pressures Findings The study attempts to states that carbon disclosure is affected solely by the company because of the presence of agency gaps between external stakeholders and corporate executives. Originality/value However, the firm’s decision to adopt a carbon disclosure strategy depends on the performance of stakeholder pressure (stakeholder salience level) and managers’ perceptions of institutional pressure (institutional pressure centrality level).

Corporate control contests and the asymmetric disclosure of bad news: Evidence from peer firm disclosure response to takeover threat

We examine the voluntary disclosure behavior of peer firms of hostile takeover targets. We find that peer firms under control threat use a disclosure strategy that emphasizes bad news: they provide more bad news forecasts, tend to bundle bad news forecasts with earnings announcements, use more negative tone in conference call presentations, and more evenly distribute negative tonal words throughout the presentation to heighten the visibility of bad news. This asymmetric disclosure of bad news is concentrated in firms whose managers have greater incentives to mitigate control threats - firms with younger CEOs, CEOs with higher total compensation, and firms with weaker anti-takeover provisions. Further tests show that peer firms also manage accruals downward. We contribute to the sparse literature on the impact of corporate control contests on voluntary disclosure by demonstrating that peer firms under control threat emphasize bad news to preempt control threat.