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In recent years, the determinants of voluntary disclosure have been explored in an extensive body of empirical research. One major limitation of those studies is that none has tried to find out whether voluntary disclosures were occasional or continuous over time. Yet this point is particularly important, as the voluntary disclosure mechanism can o...
Contexts in source publication
Context 1
... conception of IW is similar to this third meaning, but more restrictive. To be considered as withheld, the items of information must have been disclosed pre- viously. This definition allows us to focus on corporate financial comparability over time. We then extend past research by examining the following research question: why do managers withhold information they have voluntarily published before? Figure 1 depicts our framework of analysis, i.e. the manager's disclosure choices over two consecutive time periods. This figure shows how our study extends the literature on the determinants of voluntary ...
Context 2
... existing empirical studies on the determinants of voluntary disclosure concern Period 1; so far, no research has gone further and examined the manager's behaviour in Period 2. Suppose now that the manager has decided to disclose the item of information in Period 1. In Period 2, a further decision must be made (case b in Figure 1): to go on disclosing the information, or to withhold it. This time, the IW decision concerns information that was disclosed in the previous period. This decision is only made when the benefits of IW outweigh the costs. In the next subsection, we show how we derive our hypo- theses from this cost-benefit ...
Context 3
... then extend past research by examining the following research question: why do managers withhold information they have voluntarily published before? Figure 1 depicts our framework of analysis, i.e. the manager's disclosure choices over two consecutive time periods. This figure shows how our study extends the literature on the determinants of voluntary disclosure. ...
Context 4
... existing empirical studies on the determinants of voluntary disclosure concern Period 1; so far, no research has gone further and examined the manager's behaviour in Period 2. Suppose now that the manager has decided to disclose the item of information in Period 1. In Period 2, a further decision must be made (case b in Figure 1): to go on disclosing the information, or to withhold it. This time, the IW decision concerns information that was disclosed in the previous period. ...
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Citations
... Les résultats de notre recherche, qui entre en cohérence avec de précédentes études, montrent que le développement de la transparence fiscale est largement critiquable puisqu'elle répond en partie à des objectifs de légitimation. À l'avenir, il est possible que la communication fiscale des multinationales évolue significativement (aussi bien en termes de quantité que de qualité) (e.g., Chelli et al, 2014;Depoers & Jeanjean, 2012). Nous invitons donc les chercheurs à étudier ce phénomène et à s'intéresser aux causes à l'origine des changements. ...
There is growing societal interest in the tax behaviour of companies. In the wake of numerous tax scandals, new regulatory frameworks for tax transparency are emerging. This thesis investigates the socio-economic effects of these new regulations in relation to corporate social responsibility. The results show that in order to better combat tax evasion, it is necessary that tax information is made public. Standard setters should therefore revise the existing frameworks to encourage companies to publish more information on their tax policies, including their CbCR reporting. In parallel, the thesis focuses on the counter-narratives produced by NGOs around tax havens, seen as a credible alternative to help users better perceive the behaviour of firms.
... 28 The second measure of product market competition is the speed of profit adjustment measure (SPA). According to Depoers and Jeanjean (2012), SPA measures the persistence of above-median earnings. SPA captures the speed at which abnormal earnings are driven towards zero. ...
... In hopes of repairing their impaired image, some firms engage in greenwashing activities (Berrone et al., 2017), but firms that benefit from high levels of corporate legitimacy are inclined to do the opposite, that is, brownwashing. These good environmental performers tend to lead the industrial standard and set good practices that other firms imitate to promote their legitimacy and environmental reputation (Aerts et al., 2006;Depoers & Jeanjean, 2012;Miles & Covin, 2000). When these legitimate firms step up their standards, their peers are forced to follow their footsteps to catch up (Nelson & Winter, 1978;Torelli et al., 2020). ...
Numerous studies have investigated the factors that drive or curb greenwashing activities, but few have discussed the other side of the coin, brownwashing, the underreporting of environmental achievements, another form of corporate decoupling that is harmful for stakeholders. Using a sample of 5459 firm–year observations over the period 2007–2017, this study tests and finds that industry leaders brownwash their environmental performance to avoid peer pressure and excessive stakeholder attention, and to preserve their firm's leadership. Consequently, legitimate firms tend to converge toward informal industry standards that engender standardized environmental disclosures. Nevertheless, this phenomenon can be curbed by adopting sound environmental governance mechanisms aimed at improving corporate transparency and environmental practices.
... Finally, our study offers the first evidence of non-financial disclosure consistency in a regulated context (FRC, 2014). Previous evidence reports low comparability over time in voluntary disclosures (Depoers & Jeanjean, 2012). Conversely, our results indicate that the presence of a specific requirement and guidance providing specific reference to longitudinal comparability seem to be effective in encouraging companies to provide consistent NFKPI disclosures. ...
This study examines the quality of non-financial disclosure in Strategic Reports, focusing on non-financial key performance indicators (NFKPIs). A vital issue for NFKPI disclosure quality deals with overtime comparability. As NFKPI disclosure is mainly based on managers’ discretional choices regarding which indicators to disclose and how, we argue that corporate governance could play a key role in affecting disclosure practices. The analysis of a sample of UK listed companies from different industries reveals that most companies consistently report NFKPIs and that disclosure practices are influenced by the quality of the board of directors. Additional analyses indicate that among board characteristics, experience in financial key roles is the most effective. Further, intangible intensity is found to be positively associated with NFKPI consistency. Finally, more leveraged and less profitable firms seem to pay more attention to disclosure consistency, supporting the argument that they are subject to more severe scrutiny. This study is the first to examine the relationship between governance quality and NFKPI consistency. It enlarges previous evidence on the relation between corporate governance and disclosure by supporting the role of the board of directors in monitoring non-financial reporting.
... firm's incentives to report information to maintain its competitive market position and preclude rivals from benefiting from its reported information (Ali et al., 2014;Dedman & Lennox, 2009;Depoers & Jeanjean, 2012;Verrecchia, 1983;Verrecchia & Weber, 2006). In line with the proprietary cost hypothesis, firms' managers may be unwilling to report risk information because disseminating this information may attract the market's attention to their riskiness (Elshandidy et al., 2013) or encourages investors to increase their risk premium as compensation for high-risk exposure (Campbell et al., 2014). ...
... Theoretically, in the presence of proprietary costs, managers of firms may be unwilling to report information to sustain their competitive market position and to avoid reporting more than their rivals (Ali et al., 2014;Dedman & Lennox, 2009;Depoers & Jeanjean, 2012;Verrecchia, 1983;Verrecchia & Weber, 2006). On the other hand, corporate managers may disseminate proprietary information to improve their firms' reputations (Healy & Palepu, 2001). ...
... The Herfindahl-Hirschman Index (henceforth, HHI_ Score) is calculated to measure the degree of market competition that a firm faces (Depoers & Jeanjean, 2012;Hassanein & Hussainey, 2015;Lang & Sul, 2014). It is used as a proxy for industry concentration and assumes that competition is likely to decrease as the degree of industry concentration increases (Botosan & Stanford, 2005;Verrecchia & Weber, 2006). ...
This study examines the extent to which market competition influences risk reporting practice. It also explores how market competition affects the usefulness of risk reporting. The automated textual analysis measures the level of risk reporting [how much to report] and its tone [how it is reported] of UK FTSE 350 firms. The abnormal stock return is used as a proxy for the usefulness of risk reporting. In contrast to the proprietary cost hypothesis, our results indicate that the level of risk reporting is a positive function of market competition. Besides, UK firms are likely to disseminate more (less) negative (positive) news about their risks when market competition increases. However, after examining the informativeness of this reporting, we provide evidence that the level of reported risk information does not significantly enhance the abnormal stock returns of UK firms. Nevertheless, the tone of the reported risks carries incremental information indicative of a firm’s abnormal stock return, especially when market competition decreases. The findings suggest that firms are likely to alleviate their proprietary costs by framing their reporting of risk information in a way that deters potential competitors from entering their market and that market competition diminishes the perceived informativeness of such reporting. The results provide implications for investors as they should not acknowledge the disclosure of higher risk information when asking for more corporate transparency, as it lacks informativeness. Besides, policymakers may impose extra compulsory requirements on the UK firms to avoid reporting overly optimistic risk news to protect investors and avoid the adverse effects of this reporting.
... The extant literature widely recognizes the importance of leadership in managerial decisions. Consistent with the agency perspective, empirical studies mostly reveal significant negative influence of RD on VD (Gul and Leung, 2004;Cerbioni and Parbonetti, 2007;Huafang and Jianguo, 2007;Samaha et al., 2012;Allegrini and Greco, 2013;Neifar and Jarboui, 2018;Alkurdi et al., 2019), while few studies report a positive association between the two (Rouf, 2011;Depoers and Jeanjean, 2012) suggesting that combined leadership confer autonomy to managers that enable them to take superior decisions. Nevertheless, some studies report no significant influence of RD on VD (Ho and Shun Wong, 2001;Barako et al., 2006;Donnelly and Mulcahy, 2008;Kaymak and Bektas, 2017) implying that leadership structure does not necessarily influence VD. ...
Purpose
This study aims to examine the influence of some prominent corporate governance (CG) mechanisms such as board size (BS), board independence (BI), role duality (RD), board’s gender diversity (GD), ownership concentration (OC), audit committee independence (ACI), nomination and remuneration committee (NRC) and risk management committee (RMC) on voluntary disclosure (VD), as well as different types of VD after controlling the effect of some firm-specific factors for Indian firms.
Design/methodology/approach
The study selects market capitalization-based top 100 non-financial and non-utility firms listed on the Bombay Stock Exchange as on 31st March 2014. Data are drawn from the Capitaline Plus database over the period of 2014–2018. Appropriate panel data regression model is applied to examine the influence of CG on VD.
Findings
The study reveals a significant negative influence of BI on VD while GD and RMC exhibit a significant positive influence on the same. The remaining CG mechanisms such as BS, RD, OC, ACI and NRC appear to have no significant influence on VD. Analysis into the relationship between CG mechanisms and different types of VD reveals that BI, in particular, has a strong negative influence on corporate strategic disclosure (CSD) and forward looking disclosure (FWLD) while GD and RMC both exhibit a significant positive influence on CSD, FWLD, CG disclosure and financial and capital market disclosure. Notably, none of the CG mechanisms under consideration influence human and intellectual capital disclosure.
Research limitations/implications
The study considers annual reports as the only medium of making VD and ignores all other sources such as websites and press releases. Besides, it mainly emphasizes on corporate board structure, board committees and OC while other ownership structure-related variables family ownership, managerial ownership are not covered, which can be analysed in future studies.
Practical implications
The study offers some important theoretical, as well as practical connotations for regulators and practitioners operating in India, as well as other emerging economies having similar institutional settings.
Originality/value
The study is the first of its kind in India that examines the influence of various CG mechanisms on different types of VD and thereby contributes novel findings in the context of an emerging economy.
... For instance, Verecchia (1983) theoretically modeled the relationship between proprietary costs and disclosure and found that companies cut down disclosure amounts if the information would affect the future earnings flows. Some extant research report that companies have incentives against extending information that would reduce their competitive situation even if they a resulting higher cost of equity (Verrecchia, 1983;Darrough, 1993;Depoers and Jeanjean, 2012). Ali et al. (2014) argued that companies in more concentrated industries face a greater risk of revealing company secrets to their rivals through discretionary disclosures. ...
The empirical literature on the determinants of the disclosure of
forward looking information (FLD) offers mixed results. This hinders
stakeholders’ understanding of the factors affecting companies’ decision to
report FLD in the annual report narratives. Nonetheless, FLD is intended to
capture prospective performance information. However, the boilerplate,
storytelling, bias, and the auditing nature of FLD could impair its value
relevance. Therefore, this research aims to identify the main determinants of
FLD and its value relevance using an automated content analysis technique
for the measure of FLD. The research employs a sample of narrative sections
extracted from annual reports of 40 Egyptian listed companies for a nine year
time-period (2008 -2016). The final sample comprised 360 observations of
annual reports and two empirical regression models are used. FLD is
measured by the number of sentences coded as containing both forwardlooking
and financial Egyptian keywords. Value relevance of FLD is
measured by Tobin’s Q.
The study finds that FLD is positively associated with company size,
leverage, market risk, and industry type in terms of company characteristics
and with auditor type in terms of governance characteristics. However, it is
negatively associated with company’s dividend policy and competitiveness
level. This result adds to the validity of the FLD measure but suggests the
need for more enhancements in the Egyptian governance structure to
promote FLD publishing. The study also finds that FLD has market value
relevance. This suggests that the disclosure of forward looking financial
information should complement financial statements in Egypt. This also
implies that managers and regulators should consider more the economic
consequences of FLD and act on conveying transparent and prospective
information in an understandable and readable format for the stakeholders.
This research contributes to the accounting literature related to the
using of automated content analysis for investigating the characteristics of
narrative disclosure, particularly for an Arabic content using common
English software. This research also contributes to value relevance of
narrative disclosure in an emerging country; Egypt. The results also enrich
agency, signalling, stakeholders, cost of disclosures and dividend theories.
... Auditing firm size Auditing firms may use the information disclosed by their clients to signal their own quality (Inchuasti, 1997). Large auditing firms are anticipated to meet the expectation of shareholders for comparability of information released by firms in order to help them monitor managers effectively (Depoers & Jeanjean, 2012). Furthermore, larger auditing firms may be more exposed to legal liability compared to smaller ones and, therefore, have more to lose in terms of reputation damage (Owusu-Ansah, 1998). ...
... CEO duality The independence of the chairman of the board of directors may lead to a board that functions with more transparency and consequently to more disclosure (Ghazali & Weetman, 2006). On the other hand, when the positions of the CEO and chairman are held by the same person this has a negative impact on the independence of the board and its ability to exercise efficient control (Depoers & Jeanjean, 2012). Moreover, this person would tend not to disclose unfavorable information to outside parties of the company (Ho & Wong, 2001). ...
Corporate disclosures constitute the main means of communication between companies and their related parties, with the Internet being one of the most important. Although
several studies have been conducted on the extent of disclosures on the Internet and the factors that affect it (Elsayed, Masry, & Elbeltagi, 2010; Botti, Boubaker, Hamrouni, &
Solonandrasana, 2014; etc.), research during the crisis of the pandemic is limited. The purpose of this paper is twofold.
On the one hand, it aims to examine the extent and quality of disclosures that companies provided on corporate websites during the COVID-19 pandemic. On the other hand, an effort is made to assess which factors affected the extent of disclosure.
These factors focus on firm-specific characteristics (company size, leverage, profitability, auditing firm size) and core corporate governance attributes (board size, ownership
concentration and chief executive officer duality).
Results indicate that average disclosure was relatively high. Regression
analysis shows that the level of disclosure was significantly positively associated with company size, profitability and board size. This indicates that during the pandemic, larger companies, more profitable and with more board members, disclosed more
information on their websites.
The results of the study may be of interest for clients, financial and credit analysts, investors, supervisory authorities as well as management, in their effort to
improve corporate disclosures and the level of social
responsibility.
... Auditing firms may use the information disclosed by their clients as a means to signal their own quality (Inchuasti 1997). Large auditing firms are expected to meet the expectation of shareholders for comparability of information released by firms in order to help them monitor managers effectively (Depoers and Jeanjean 2012). Furthermore, larger auditing firms may be more exposed to legal liability compared to smaller ones and, therefore, have more to lose in terms of reputation damage (Owusu-Ansah 1998). ...
... A company with dispersed ownership may disclose additional information to signal that managers act to the best interest of their principals (Ghazali and Weetman 2006). In companies with diffused ownership agency problems may be severe, especially in the case of a dominant shareholder (Depoers and Jeanjean 2012). Results of prior research regarding the association between disclosure and CEO duality are mixed. ...
... The independence of the chairman of the board of directors may lead to a board with more transparency and therefore to more disclosure (Ghazali and Weetman 2006). On the other hand, when the positions of the CEO and chairman are held by the same person the independence of the board is limited and its ability to exercise efficient control is reduced (Depoers and Jeanjean 2012). Moreover, this person would tend not to disclose unfavorable information to outside parties of the company (Ho and Wong 2001). ...
... The average of Innovation is 7.8%, which means that French companies allocate, on average, 7.8% of their total assets to engage in innovation activities. Table 1 also shows that the average HHI index value reaches 0.121, which is less than the one reported by Depoers and Jeanjean (2012) in the French context (0.197). Lastly, on average, 10 financial analysts cover our sample firms, which is relatively similar to the result reported by Boubaker and Labégorre (2008). ...
The purpose of this paper is to examine the effect of corporate innovation strategy on firm-level stock price crash risk. Using a sample of French listed firms covering 2007–2016, we show that innovative firms are more prone to future stock price crash risk. Managers of these firms have optimistic expectations about growth prospects that encourage them to hide bad news, leading to higher stock price crash risk. This positive relationship is only prevalent in competitive product markets and with low analyst coverage suggesting that innovative firms are likely to experience stock price crashes when information asymmetry is exacerbated. Our results stand up to several robustness tests and remain unchanged after addressing endogeneity concerns.
