Download or read book The Value Relevance of Mandatory Corporate Disclosures written by Mishari M. Alfraih and published by . This book was released on 2016 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study is the first to explore the association between the level of compliance with International Financial Reporting Standards (IFRS) mandatory disclosures and the value relevance of accounting information to market participants. This association is examined in the context of listed companies in the emerging economy of Kuwait - a jurisdiction with a history of applying international accounting standards but with lax enforcement. The research design of the study consists of two parts. First, the level of compliance with mandatory IFRS disclosures of Kuwait Stock Exchange (KSE) listed firms in 2010 is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book values, is examined empirically using Ohlson's (1995) valuation model that captures the level of compliance with IFRS among KSE listed firms. The results show a significant association between the level of compliance with IFRS and the value relevance of earnings and book values to KSE investors, highlighting the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. The outcomes of this study serve to inform regulators and companies on whether moving toward stricter compliance with IFRS will necessarily improve the value relevance of financial statement information.
Download or read book The Evolution of Corporate Disclosure written by Alessandro Ghio and published by Springer Nature. This book was released on 2020-04-02 with total page 183 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a critical analysis of the evolution of corporate disclosure. Building upon prior academic literature, it assesses the most important changes in mandatory corporate disclosure, the growing relevance of social and environmental disclosure, and revolutionary new forms of corporate communication, in particular social media. It also includes empirical analyses that shed further light on the impact of voluntary communication, i.e. social and environmental reporting and corporate social media communication, on managerial and investment decisions. Lastly, it discusses new directions for accounting and corporate governance research on the theoretical and empirical challenges of corporate disclosure. Offering a wealth of relevant and timely advice, the book will help regulators design policies that allow businesses to overcome current and emerging economic, social, and technological challenges.
Download or read book Value Relevance of IFRS Mandatory Disclosure Requirements written by Ioannis Tsalavoutas and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Purpose: We address recent calls for research regarding the valuation implications of mandatory disclosure requirements (cf. Hassan et al., 2009; Leuz and Wizocki, 2008; Schipper, 2007). Design: We measure compliance with all IFRS mandatory disclosure requirements for a sample of firms. We subsequently explore whether the compliance scores (i.e. the mandatory disclosure levels) are value relevant and whether the value relevance of accounting numbers differs across high and low compliance/disclosure companies.Findings: We find that the levels of mandatory disclosures are value relevant. Additionally, not only the relative value relevance (i.e. R2) but also the valuation coefficient of net income of high compliance companies is significantly higher than that of low-compliance companies.Limitations: This paper is an indicative single country case study that focuses on the IFRS adoption year (2005) in the EU. It forms a new avenue for research regarding the valuation implications of mandatory disclosure requirements. It remains to future research to examine whether our findings also hold in other countries and periods.Practical implications: These findings are expected to be particularly relevant to standard setters and regulatory bodies who are concerned about the implications of mandatory disclosure requirements (Schipper, 2007). Originality/value: To the best of our knowledge, this is the first paper that examines the value relevance implications of IFRS mandatory disclosure requirements, focusing on European country after 2005. The findings indicate that IFRS mandatory disclosures do lead to more transparent financial statements (cf. Pownall and Schipper, 1999), mitigating concerns about companies' fundamentals (cf. Anctil et al., 2004).
Download or read book The Value Relevance of Corporate Sustainability Disclosures written by George Serafeim and published by . This book was released on 2018 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Disclosure Quality Under Integrated Reporting written by Alessandro Cortesi and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the aftermath of the globalization first and of the financial crises then, the traditional approaches to reporting appeared outdated. In response, the Integrated Report (IR) has been proposed with the aim to increase the transparency, making more clear the interconnections between all areas of the firm business and its performance. Our analysis reveals that the IR actually creates value for investors, as adopting firms are reworded by the market, and increases the value relevance of earnings per share. Our results are robust to the geographical area, the firm dimension and the country legal system, providing new evidences on the efficacy of the IR as well as on the necessity to make it mandatory.
Download or read book Mandatory Non financial Risk Related Disclosure written by Stefania Veltri and published by Springer Nature. This book was released on 2020-07-31 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on the impact of the disclosure of non-financial risk, which could be seen as the most relevant non-financial information (NFI), in the aftermath of the 2014/95/EU Directive. The author analyses whether the switch from voluntary to mandatory NFI enhance the quality of disclosed NF risk-related information and the usefulness of the risk disclosure for investors. The book focuses specifically on the mandatory disclosure of non-financial (NF) risks as required by the EU Directive for listed Italian companies, investigating both the state of art of its disclosure and its usefulness for investors. In doing so, the book contributes to fill two relevant gaps in risk literature. The first research gap is related to the insufficient investigation of the disclosure of NF risks. Companies mandated to disclose risk-related information focused mainly on financial risks, in spite of the width of the definition of risk, conceived as information about any opportunity, danger, threat, or exposure that has or could impact the company in the future. The second gap is that empirical evidence about the effects of corporate risk disclosures is still limited, and the potential benefits of the disclosure of information on risks have not been fully explored. In particular, the relationship between risk disclosures and firm value is under researched, as the risk literature mainly focuses on the incentives question, related to the motives for which companies decide to disclose. The research in this book focuses on Italy, a country that provides a unique opportunity to examine the impact of mandatory NF risk disclosure on firm market value, being one of the biggest industrial European countries that had not mandatory legislation for NFI disclosure, and also one of the leading countries in voluntary corporate social responsibility (CSR) reporting at an international level. It has been carried out in the fiscal year 2017, the first year of the application of the mandatory NF disclosure for obliged Italian listed PIEs. The book contributes both to the measurement literature, as it presents a self-constructed quality NF risks and to the value relevance analysis literature, providing evidence of the usefulness of financial and non-financial risk-related disclosures in the Italian context.
Download or read book The Value Relevance of Annual Report Disclosures in the Brokerage Industry written by Joan Lee Van Hise and published by . This book was released on 1998 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Information Relevance Reliability and Disclosure written by Xiao-Jun Zhang and published by . This book was released on 2014 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relation between information's properties, such as reliability and relevance, and public disclosure policy. It shows that the optimal accounting system often involves a carefully balanced combination of mandatory and voluntary disclosure, with mandatory reporting focused on more reliable information. The emphasis on reliability causes the welfare-maximizing mandatory report to consistently lag behind the financial market in incorporating value-relevant information.
Download or read book The Value Relevance of Annual Report Disclosures in the Brokerage Industry written by Joan Van Hise and published by . This book was released on 1996 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Value Relevance of Corporate Voluntary Disclosure written by Rupjyoti Saha and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this study is to examine whether or not voluntary disclosure made by Indian listed companies are value-relevant in the capital market. The sample consists of top 100 non-financial, non-utility companies based on market capitalization listed on the Bombay Stock Exchange (BSE) over the period 2014-2017. Data regarding voluntary disclosure level has been collected by analyzing the contents of annual reports. In order to investigate the impact of voluntary disclosure on firm value, fixed-effect panel data regression model is employed. Furthermore, Two Stage Least Squares (2SLS) regression model with instrumental variables is used as a robustness test to alleviate the endogeneity issue. The findings of the study reveal that voluntary disclosure is value-relevant, i.e., impacts the firm value. The more the voluntary disclosure made by the companies, the higher the value they have in terms of market capitalization. Therefore, this finding provides impetus to managers to disclose more information voluntarily to meet the information needs of the stakeholders. By evaluating the value relevance of overall voluntary disclosure, the study contributes to the relevant literature, as there is paucity of studies regarding how the market participants perceive voluntary disclosure in an emerging market such as India, which is subjected to market imperfections.
Download or read book The Effect of Mandatory Quantitative Input Disclosures on Investor Perception of Mark to model Fair Value Estimates written by Michael C. Wolfe and published by . This book was released on 2013 with total page 109 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine the impact of mandatory quantitative input disclosures on the perceived reliability of Level 3 fair value estimates. Since there is greater complexity and subjectivity associated with Level 3 valuations, they are more susceptible to both measurement error and intentional manipulation. This can lead to lower perceived reliability for the reported Level 3 amounts. I find evidence of a decrease in stock volatility and forecast dispersion associated with Level 3 investment securities when the quantitative input information is required. I do not find evidence that the value relevance of Level 3 securities is greater or that stock returns or analyst forecast revisions associated with changes in Level 3 securities are greater when firms are required to provide input disclosures. Additional tests indicate that the observed decrease in stock volatility and forecast dispersion is observed only for firms with a lower quality information environment, i.e., small firms, firms with lower analyst following, and firms with lower audit quality. I also provide evidence that the decrease in stock volatility and forecast dispersion is observed only for firms with lower capital levels. Overall, the evidence is consistent with the quantitative input disclosures reducing uncertainty associated with Level 3 valuations where reliability concerns are potentially the greatest, i.e., firms with a lower-quality information environment and firms in a weaker financial condition. My evidence should be of interest to standard-setters, investors, and others as they continue to address disclosure requirements associated with fair value measurements in the aftermath of the financial crisis.
Download or read book The Economics and Politics of Accounting written by Christian Leuz and published by OUP Oxford. This book was released on 2005-09-15 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting and the role of accountants has permeated the modern societies. For the most part we have accepted the impartiality and objectivity of accounting and not recognized how accounting systems are embedded in a country's economic and legal framework, much of which is in turn shaped by political processes. This web of interactions results in complex economic and political questions which require accounting researchers to focus on several related trends: information economics, regulatory economics, sociology, and political science. Although considerable progress has been made in the field of accounting, many fundamental questions are still subject to debate. In this book leading international scholars address a number of important questions: · What is the role of accounting in security valuation, decision making and contracting? · What can we learn from economics-based research in accounting? · What is the role of auditing and how can accounting standards be enforced? · What are the cost and benefits of accounting and disclosure regulation? · What is the role of accounting in society? · How does lobbying affect the political process of standard setting? · What are the consequences of the internationalization of standard setting? This seminal book will be of interest to academics, researchers, and graduate students of Accounting, Finance, Business Studies, Sociology, and Political Economy.
Download or read book The Information Content of Corporate Social Responsibility Disclosures in Europe written by Stephanie Mittelbach-Hoermanseder and published by . This book was released on 2020 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how firm value (measured via stock prices) is related to corporate social responsibility (CSR) disclosure and how the institutional environment influences this relationship. To test our hypotheses, we apply textual analysis to our data on firms listed in the STOXX Europe 600 for the period 2008-2016. Our investigation of topic-specific CSR disclosure indicates that when firms shifted from voluntary to mandatory reporting, following the announcement of Directive 2014/95/EU, the association between their share price and CSR disclosure became significantly negative. For the period before the announcement, this relationship is either positive or statistically insignificant. We also show that the institutional environment can impact this relationship in four distinct ways: the level of CSR awareness, the level of employee protection, the degree of enforcement and the strength of the legal environment. We find that the first two have a negative impact on the incremental value relevance of specific CSR disclosure, whereas the last two have a positive impact. Lastly, our results also indicate that the magnitude of (a) the relationship between a firm's CSR disclosure and its value and (b) the impact that the firm's institutional environment has on this relationship depends on the specific CSR topics.
Download or read book Silence is Golden Evidence from Disclosing Related Party Transactions in China written by Agnes W. Y. Lo and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The significance and the manipulative nature of related-party transactions (RPTs) render transparent disclosure necessary and relevant for investors who infer firm value from accounting disclosures. However, the full disclosure of RPTs may not be cost effective because not all of the information that firms possess is value relevant to financial statement users. This study provides new evidence on the value relevance of additional disclosure on RPTs by using a unique, mandatory disclosure requirement of transfer pricing policies in China. We hypothesize and find that, compared to the mere disclosure of amounts for related-party sales, the disclosure of transfer pricing methods provides incremental value-relevant information beyond total sales. We also show that the disclosure of transfer pricing details complements weak corporate governance mechanisms and improves the prediction of abnormal returns. Our findings are robust to various model specifications, and demonstrate the significance of transparent and relevant RPT disclosure in inferring firm value.
Download or read book Mandatory Earnings Disaggregation and the Value Relevance Persistence and Pricing of Earnings Components written by Elmar Retief Venter and published by . This book was released on 2011 with total page 664 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thus far, the disaggregation of non-recurring items from earnings has been investigated mostly in the United States, in the context of special items and pro forma earnings. The disclosure of these items is mainly on a voluntary basis. Managers of firms have significant discretion in the calculation of such items (McVay, 2006). In this regard, the literature suggests that non-recurring items have lower persistence than recurring items, and that recurring earnings has higher value relevance than earnings determined in accordance with Generally Accepted Accounting Practice (GAAP) (Bradshaw and Sloan, 2002; Brown and Sivakumar, 2003). However, surprisingly, non-recurring items (both special items and exclusions from pro forma earnings) are significantly mispriced in the United States (Dechow and Ge, 2006; Doyle, Lundholm and Soliman, 2003). This evidence suggests that, despite the apparently transitory nature of non-recurring items, investors are unable to estimate their implications for future earnings accurately. In this study, this anomaly is investigated by focusing on a different regulatory setting. In South Africa, firms listed on the Johannesburg Securities Exchange (JSE) are required to disclose headline earnings in addition to earnings determined in accordance with the International Financial Reporting Standards (IFRSs). Headline earnings effectively excludes some non-recurring items. In addition, firms are required to present a reconciliation between headline earnings and IFRS earnings in the financial statements. The South African setting differs from the United States in two important respects. Firstly, all firms are required to present headline earnings in South Africa, whereas pro forma earnings reporting is voluntary in the United States. Secondly, the allowable exclusions from headline earnings are formally defined and subject to external audit, while firms in the United States are allowed to define their own exclusions from pro forma earnings. This study investigates the value relevance, persistence and pricing of the earnings components that result from the headline earnings definition in South Africa. The results indicate that headline earnings exclusions contain information that is incrementally value relevant to IFRS earnings. This evidence suggests that investors find the disaggregation of headline earnings from basic earnings useful. In a sub-sample of firms with positive earnings, headline earnings appears to have higher value relevance than IFRS earnings. The persistence tests indicate that, as expected, headline earnings exclusions (the nonrecurring part of earnings) display lower persistence than headline earnings (the recurring part of earnings). The study shows -- consistent with Sloan's (1996) findings -- that accruals are less persistent than cash flows. This can be attributed largely to headline earnings exclusions. The pricing tests indicate that investors significantly underweight the cash flow component of earnings. Notably, neither headline earnings exclusions nor any of the other earnings components reflect significant mispricing. When additional explanatory variables are included in the analyses, the mispricing of the cash flow component disappears.
Download or read book IFRS Mandatory Disclosures in Malaysia written by Mazni Abdullah and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effect of family control on IFRS mandatory disclosure levels, and the valuation implications of these disclosure levels, for Malaysian companies. We find that family control is related negatively to disclosure and that compliance levels are not value relevant. These findings suggest that agency theory predictions and theories linking common law legal systems to high quality financial reporting require refining in certain national contexts. Where Type 2 agency problems dominate, institutional arrangements intended to enhance financial reporting quality aimed at mitigating Type 1 problems in developed markets may have limited effect in less developed jurisdictions.
Download or read book Value Relevance of the Voluntary Disclosure of Advertising Expenditure written by Xuchen Hu and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Advertising expenditure is one of the most important budget items supporting marketing activities for most companies, and may be treated as an intangible asset. Through the impact on demand and costs, advertising activities affect the firm's pricing and output decisions as well as the firm's market value (Tannous, 1997; Chauvin & Hirschey, 1994). Despite the significant economic importance of advertising expenditure, not much attention has been given to the value relevance of advertising expenditure and the impact of advertising expenditure disclosure on firms' market value. Most of the empirical studies for value relevance of advertising expenditure have been conducted using data from the US and UK Academic research on the value relevance of advertising expenditure in Canada is nonexistent. The accounting standard applied in Canada is different from that used in prior US and UK studies. . Canada adopts Canadian GAAP before 2011, and switches to IFRS from 2011onwards. Both regimes do not require firms in Canada to disclose advertising expenditure. However, most US studies use data before 1994 to analyze value relevance of advertising expenditure. Before 1994, disclosing advertising expenditure is mandatory for US firms under US GAAP. The UK evidence uses data before 2005, during which period UK firms still adopt UK GAAP. Although UK. GAAP does not require companies to disclose advertising expenditure, unlike IFRS, different accounting standards can lead to different financial data reporting and different results. In addition, studies on the impact of voluntary disclosure of advertising expenditure on market value are nonexistent. Furthermore, Canada has a more stable financial system than that of the US and UK In this context, the objective of this thesis is to initiate research on the important dimension of advertising expenditure among Canadian firms. The findings of this thesis will enhance understanding of the relationship between advertising expenditure and market value, and companies' decisions to voluntarily disclose advertising expenditure on their market value.
