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1
White, Gregory, Alina Lee, and Greg Tower. "Drivers of voluntary intellectual capital disclosure in listed biotechnology companies." Journal of Intellectual Capital 8, no. 3 (July 31, 2007): 517–37. http://dx.doi.org/10.1108/14691930710774894.
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PurposeThe paper seeks to investigate the key drivers and level of voluntary disclosures in biotechnology company annual reports.Design/methodology/approachThe paper uses an intellectual capital disclosure index score of voluntary disclosures in a large sample of listed biotechnology companies, and tests the relationship between voluntary disclosures of intangible firm value with traditional agency theory variables. The relationships are tested statistically using correlation and multiple‐regression analysis.FindingsThe key drivers of voluntary intellectual capital disclosures were the level of board independence, firm age, level of leverage and firm size. Multiple regression analysis demonstrated that board independence, leverage and size had a significant relationship with the level of voluntary intellectual capital disclosure. Separate regression controlling for large‐sized and small‐sized firms demonstrated that voluntary intellectual capital disclosure was only driven by board independence and the levels of firm leverage in large firms. Small firms did not demonstrate this relationship.Research limitations/implicationsThe implications of this research are that smaller biotechnology companies' managers are not motivated by external debt‐holder demands to make voluntary disclosures about intangible firm value. In addition, large biotechnology companies, which are better able to establish independent board oversight, appear more effective at driving voluntary intellectual capital disclosures, perhaps in response to greater demand by owners. A limitation of this study is its Australian context and that data is analysed only from 2005 financial year annual reports.Originality/valueTo the authors' knowledge this is an original paper whose findings have valuable implications for managing intellectual capital at the firm level. The paper clearly demonstrates that disclosures about intangible firm value is being driven by traditional agency theory variables and more contemporary corporate governance issues, and that small firms may be ignoring the importance of disclosing more about their intellectual capital.
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Jeong, Kyunbeom. "The Reaction Of Analysts To Management Disclosures And Firm Characteristics: Conservatism And Corporate Governance." Journal of Applied Business Research (JABR) 32, no. 6 (November 2, 2016): 1629. http://dx.doi.org/10.19030/jabr.v32i6.9812.
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This paper examines the effect of firm characteristics on analyst reaction to management disclosures. Prior studies have overlooked the fact that analysts can react differently as a result of firm characteristics that can affect the management forecasts’ credibility and usefulness, as well as specific situation like SEO or management forecast characteristics itself. This study extends this line of research by considering firm characteristics after controlling for factors with respect to management forecast characteristics that may affect analyst reaction. I provide evidence that good news management disclosures by firms with high levels of conservatism have more impact to the analysts; therefore, analysts react more to good news management disclosures issued by firms with a high level of conservatism than good news management disclosures that are issued by firms with low levels of conservatism. Similarly, the study finds that analysts react less to bad news management disclosure issued by firms with a high level of conservatism. I also find that analysts have a stronger reaction to management disclosures announced by firms with strong governance and a lower level of managerial ownership. These results show that firm characteristics are also factors that are considered by analysts in the revision of their earnings forecasts following management disclosure.
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Akpan, Dorathy Christopher, Rose Augustine Odokwo, and Patrick Edet Akinninyi. "Corporate Attributes and Risk Management Disclosure of Listed Insurance Companies in Nigeria." FUDMA Journal of Accounting and Finance Research [FUJAFR] 2, no. 1 (March 30, 2024): 46–57. http://dx.doi.org/10.33003/fujafr-2024.v2i1.77.46-57.
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Disclosure of risk management practices by firms enhances transparency, thus giving shareholders’ more confidence and lowering their uncertainty about future cash flows. This study therefore examined the effects of corporate attributes on risk management disclosures of listed insurance firms in Nigeria from 2013 to 2022. Firm size, firm profitability and firm leverage were the measures of corporate attributes employed in this study while risk management disclosure was the dependent variable. The research design adopted for this study was ex post facto and twenty-three listed insurance firms constituted the population of the study. Purposive sampling technique was employed to select eight listed insurance firms and secondary used were analysed using marginal logistic regression. The statistical package employed was STATA 16. From the analysis, it was found out that firm size, firm profitability and firm leverage have significant effect on risk management disclosure of listed insurance firms in Nigeria. Thus, it was concluded that some firm specific attributes can enhance risk management disclosures of listed insurance firms in Nigeria. Based on these findings, the study recommended that the management of insurance firms in Nigeria should strive to increase their level of profitability as more profitable firms have the incentives to engage in risk management and disclosure practices.
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Jorgensen, Bjorn N., and Michael T. Kirschenheiter. "Discretionary Risk Disclosures." Accounting Review 78, no. 2 (April 1, 2003): 449–69. http://dx.doi.org/10.2308/accr.2003.78.2.449.
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We model managers' equilibrium strategies for voluntarily disclosing information about their firm's risk. We consider a multifirm setting in which the variance of each firm's future cash flow is uncertain. A manager can disclose, at a cost, this variance before offering the firm for sale in a competitive stock market with risk-averse investors. In our partial disclosure equilibrium, managers voluntarily disclose if their firm has a low variance of future cash flows, but withhold the information if their firm has highly variable future cash flows. We establish how the manager's discretionary risk disclosure affects the firm's share price, expected stock returns, and beta, within the framework of the Capital Asset Pricing Model. We show that whereas one manager's discretionary disclosure of his firm's risk does not affect other firms' share prices, it does affect the other firms' betas. Also, we demonstrate that a disclosing firm has lower risk premium and beta ex post than a nondisclosing firm. Finally, we show that ex ante, the expected risk premium and expected beta of each firm are higher under a mandatory risk disclosure regime than in the partial disclosure equilibrium that arises under a voluntary disclosure regime.
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Amel-Zadeh, Amir, Alexandra Scherf, and Eugene F. Soltes. "Creating Firm Disclosures." Journal of Financial Reporting 4, no. 2 (September 2019): 1–31. http://dx.doi.org/10.2308/jfir-52578.
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Managers expend significant time and effort preparing disclosures about firm performance and strategy. Although prior literature has explored how variation in the style and presentation of disclosures impacts investors' perceptions of firms, little is known about how firms actually create these disclosures and how this process impacts presentation. Based on field data collected from nearly 200 firms, we show that there is considerable variation in who prepares disclosures, when they are prepared, and the amount of effort expended by different types of managers (e.g., legal, public relations/marketing, finance, investor relations, senior leadership). We find that these differences in organizational processes are associated with differences in the structure, style, and tone of 10-Ks and conference calls. Ultimately, our investigation begins to illuminate how individual managerial efforts vary across firms and contribute to differences in public disclosures.
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Crabtree, Aaron, and John J. Maher. "Credit Ratings, Cost Of Debt, And Internal Control Disclosures: A Comparison Of SOX 302 And SOX 404." Journal of Applied Business Research (JABR) 28, no. 5 (August 21, 2012): 885. http://dx.doi.org/10.19030/jabr.v28i5.7231.
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We compare the effects of SOX 302 and SOX 404 mandated internal control system disclosures on firm credit ratings, changes in credit ratings, and firm cost of debt. We find results consistent with the interpretation that disclosure of firm internal control deficiencies provides incremental information to credit analysts which is negatively associated with a firms credit rating, and positively associated with cost of debt. Additionally, we find that while disclosures under SOX 302 are negatively related to credit ratings, this effect largely disappears once prior 404 disclosures are considered. Importantly, the impact of 404 internal control disclosures is significant regardless of past 302 disclosures. These results contribute positively to the public policy debate concerning the efficacy of auditor attested internal control evaluations required by SOX 404.
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Talpur, Shabana, Mohd Lizam, and Nazia Keerio. "Determining firm characteristics and the level of voluntary corporate governance disclosures among Malaysian listed property companies." MATEC Web of Conferences 150 (2018): 05010. http://dx.doi.org/10.1051/matecconf/201815005010.
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This study examined the level of voluntary corporate governance disclosures and the influence of firm characteristics (i.e., firm size, firm age, and firm market listing) on the level of these disclosures among Malaysian property listed companies. The check-list to measure the voluntary corporate governance disclosures was adopted from Malaysian corporate governance index 2011 by Minority Shareholder Watchdog Group (MSWG). The voluntary corporate governance disclosure practices and firm specific characteristics were obtained from annual reports of property listed companies on Bursa Malaysia for the period of 2012 to 2015. The findings suggested an improving voluntary corporate governance reforms in Malaysia. However, the firm size was found as an inflicting factor in determining the level and quality of voluntary corporate governance disclosure practices. On the contrary, the results found were contradicting the hypothesis related to firm age and firm market listing, as no relation of voluntary corporate governance disclosures and firm age and firm market listing. The study has made an interesting contribution toward the disclosure and corporate governance by contributing in understanding the importance of quality disclosure and good governance practices.
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Russell, Mark. "New information in continuous disclosure." Pacific Accounting Review 27, no. 2 (April 7, 2015): 229–63. http://dx.doi.org/10.1108/par-12-2012-0064.
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Purpose – This paper aims to examine the price-sensitivity of information under capital market disclosure regulation, the Australian continuous disclosure regulation (CDR). Design/methodology/approach – The study tests the information content of continuous disclosures and identifies the firm characteristics that condition the price-sensitivity of information under CDR. Findings – The study provides evidence that continuous firm disclosures are significantly associated with stock price adjustment to information. Further results are consistent with firm disclosure and its information content being determined by the economics of the firm. Practical implications – The findings of the study support the introduction of ongoing and continuous disclosure regimes in a number of capital markets, and assist firms and regulators model the price-sensitivity of information under CDR. Originality/value – The study highlights the sources of an informed market, and contributes to our understanding of the conditions under which the CDR reveals unexpected information. The results provide evidence of an association between firm disclosure and stock price synchronicity, consistent with managerial incentives to disclose information.
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Orshi, Teryima Samuel, Abdulateef Yunusa, and James Uchenna Okpe. "Value Relevance of GRI Economic and Ethics/Integrity Disclosure among Listed Manufacturing Firms in Nigeria: The Role of Ownership Concentration." FUDMA Journal of Accounting and Finance Research [FUJAFR] 1, no. 1 (July 17, 2023): 96–113. http://dx.doi.org/10.33003/fujafr-2023.v1i1.1.96-113.
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This study evaluates the value relevance of GRI Economic and Ethics/Integrity Disclosures among listed Manufacturing Firms in Nigeria. It also investigates the role of ownership concentration in influencing the value relevance of GRI disclosures. The study adopted the purposive sampling technique to select a sample of 43 listed Manufacturing Firms on the Nigerian Exchange Group (NGX) for the 8-year period from 2014–2021. The study used the Ohlson (1995) model to analyze the value relevance of GRI Economic and Ethics/Integrity Disclosures. The results of the study showed that GRI Economic Disclosure, Ethics/Integrity Disclosure and Ownership Concentration are value relevant in the Nigerian listed Manufacturing Firms. Further, the study found that ownership concentration has a significant moderating influence on the value relevance of GRI Economic and Ethics/Integrity Disclosures among listed Manufacturing Firms in Nigeria. The results of the study provide evidence that listed Manufacturing Firms should pay special attention to GRI Economic and Ethics/Integrity Disclosures in order to enhance firm value and investor decision-making. The study contributes to the extant literature by being the first to investigate the value relevance of GRI Economic and Ethics/Integrity Disclosures and the role of ownership concentration among listed Manufacturing Firms in Nigeria. The study recommends that listed Manufacturing Firms should respond to the GRI Economic and Ethics/Integrity Disclosure requirements in order to enhance firm value.
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Muttakin, Mohammad Badrul, Arifur Khan, and Nava Subramaniam. "Firm characteristics, board diversity and corporate social responsibility." Pacific Accounting Review 27, no. 3 (August 3, 2015): 353–72. http://dx.doi.org/10.1108/par-01-2013-0007.
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Purpose – This study aims to purport to investigate the relationship between firm size, profitability, board diversity (namely, director gender and nationality) and the extent of corporate social responsibility (CSR) disclosures within a developing nation context. Design/methodology/approach – The dataset comprises 116 listed Bangladeshi non-financial companies for the period of 2005-2009. A CSR disclosure checklist was used to measure the extent of CSR disclosures in the annual reports and a multiple regression analysis to examine its association with firm characteristics and two board diversity features – female and foreign directorship. Findings – Results indicate that large and more profitable firms provide more CSR disclosures. It was also found that female directorship has a negative association with CSR disclosures, while foreign directorship has a positive impact on such disclosures. This paper documents that CSR disclosures decrease further when family ownership is higher and there are more female directors on the board. Originality/value – This study extends empirical evidence on the association between firm characteristics, board diversity and CSR disclosure practices from a developing nation context. Furthermore, this study also reveals that female directors’ impact on firm disclosures may differ between developing and developed nations, and somewhat impeded in the latter. This paper also provides empirical evidence on the importance of appointment of foreign nationals on the boards of developing countries to influence CSR practices.
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Vidya Bai, G., Daniel Frank, and K. Sudhir Prabhu. "Does ESG disclosure enhance firm performance during COVID-19? Evidence from Nifty 500 firms." Investment Management and Financial Innovations 21, no. 3 (July 19, 2024): 74–83. http://dx.doi.org/10.21511/imfi.21(3).2024.07.
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Market turmoil caused by COVID-19 has weakened firms’ financial performance, highlighting the prominence of sustainable business practices by incorporating Environmental, Social, and Governance performance and their disclosure. Though past studies investigated COVID-19’s impact on firm performance, there is consensus on the role of firms’ Environmental, Social, and Governance disclosures between firm performance and the pandemic. With this view, the study aims to examine the impact of COVID-19 on firms’ financial performance with the moderating role of Environmental, Social, and Governance performance disclosure. To do so, the study retrieved data of Nifty 500 index companies from the Bloomberg database for a sample period ranging from 2016 to 2022. To this end, the study performed the fixed-effect regression and GMM model. The findings reveal a significant negative impact of the pandemic on Return on Assets (β =-4.812), Return on Equity (β =–.675), and Earnings Per Share (β = –2.875), highlighting the unfavorable effect of the pandemic on firm performance. Further results showed that firms’ Environmental, Social, and Governance performance disclosure positively moderates the connection between COVID-19 and Return on Assets (β = 3.231), Return on Equity (β = 0.032), and Earnings Per Share (β = 1.523), respectively. This indicates that companies actively involved in Environmental, Social, and Governance disclosure are less likely to suffer during the pandemic in terms of financial performance due to their ESG disclosures.
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Dontoh, Alex. "Voluntary Disclosure." Journal of Accounting, Auditing & Finance 4, no. 4 (April 1989): 480–511. http://dx.doi.org/10.1177/0148558x8900400404.
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The paper investigates incentives for firms to voluntarily disclose private information about future outcomes. A voluntary disclosure model that encompasses a competitive product market equilibrium and where proprietary (disclosure costs) costs are endogenously determined is presented. Possible explanations for empirical phenomena such as why value-maximizing firms voluntarily disclose unfavorable information (disclosures that cause investors to lower their expectations of firm earnings) when such disclosures tend to result in significant market price declines is provided. Existence of a unique Nash equilibrium where firms exercise discretion over such disclosures is demonstrated, and implications for extant empirical research on voluntary disclosures are discussed.
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Hoque, Monzurul, and KC Rakow. "Do voluntary cash flow disclosures and forecasts matter to value of the firms?" Managerial Finance 42, no. 1 (December 31, 2015): 3–12. http://dx.doi.org/10.1108/mf-09-2015-0253.
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Purpose – Two stylized facts emerge from cash flow literature. One explores the link between free cash flow (FCF) to firm value (Jensen, 1986) and establishes that FCF increases firm value. The other posits FCF may be value decreasing as firms tend to over invest when there is high level of FCF (Richardson, 2006). Two camps have opposing views yet together they establish that FCF is value relevant. If FCF or cash flow, in general, is value relevant then managers will be motivated to present forecasts to investors. The paper aims to discuss these issues. Design/methodology/approach – The authors hand collect data from each firm’s press releases and earnings announcements and perform an event study around this date to see how firm forecast and disclosure policies affect firm value. Findings – The analysis demonstrates that disclosures and forecasts do have significantly positive relation with tech firms suggesting that firms in the technology industries are more forthcoming with cash flow disclosures and forecasts in their earnings announcements. The authors further show that these disclosures and forecasts negatively affect the firm value of tech firms. Originality/value – This paper contributes to the literature that there is empirical evidence that cash flow disclosures and forecasts matter to the value of the firm. Further, it posits that unlike understanding the existing views as opposing each other, may be the authors will be better served if they view both of them as right depending on the optimality of forecasts. The future efforts will be directed toward exploring the optimality of cash flow disclosures.
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Agyeman, Benjamin, Dorcas Quarshie, and James T. Bonn. "Corporate Governance and Voluntary Disclosures in Annual Reports of Ghanaian Listed Banks." International Journal of Research and Innovation in Social Science VIII, IIIS (2024): 2416–34. http://dx.doi.org/10.47772/ijriss.2024.803177s.
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This study investigated the relationship between corporate governance and voluntary disclosures of listed banks in Ghana. The study specifically looked at whether Banks with a larger board size have a higher extent of voluntary disclosures, Again, whether Banks that use the services of a Big 4 audit firm have a higher extent of voluntary disclosures, Also, Banks with larger female directors have a higher extent of voluntary disclosures and lastly whether firms with a higher proportion of non-executive directors on the board have a higher extent of voluntary disclosures. Population of the study was the nine banks listed on the Ghana Stock Exchange. The study examined eight (8) listed banks on the Ghana Stock Exchange from 2017 to 2021 financial year. Data was analyzed by using SPSS version 21.The voluntary disclosure levels were established using a 118-item checklist that included strategic, non-financial, and financial information. The study found a statistically significant positive relationship between Big 4 audit firm and female directorswith voluntary disclosure. However, non-executive directors and board size tend to negatively impact voluntary disclosure. It is recommended that Big 4 audit firm and female directors should be given more attention with regard to voluntary disclosure.
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Aboud, Ahmed, and Ahmed Diab. "The impact of social, environmental and corporate governance disclosures on firm value." Journal of Accounting in Emerging Economies 8, no. 4 (November 5, 2018): 442–58. http://dx.doi.org/10.1108/jaee-08-2017-0079.
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PurposeThe purpose of this paper is to examine the impact of environmental, social, and governance (ESG) practices disclosure and firm value in the Egyptian context. This is done through investigating the influence of being listed and ranked in the Egyptian Corporate Responsibility Index on firm value during the period starting from 2007 to 2016.Design/methodology/approachUsing univariate and multivariate analyses, the findings support the economic benefits of ESG disclosures.FindingsThe authors find that firms listed in the ESG index have higher firm value, and that there is a positive association between firms’ higher rankings in the index and firm value, as measured by Tobin’sq.Research limitations/implicationsThe findings provide feedback to regulators and standard-setters in the developing countries, and more specifically the Egyptian regulators, on the benefits associated with the introduction of the sustainability index (Standard & Poor’s (S&P)/EGX ESG index). This, in turn, clarifies how the government’s efforts to promote ESG provide benefits to publicly traded firms.Practical implicationsBy linking ESG to firm value, the ESG index will enable investors to take a leading role in inducing firms to enhance transparency and disclosure, and hence, improving their reporting standards. This, in turn, will ultimately result in improving sustainability and governance practices in Egypt.Social implicationsThe reported positive market reactions to social and governance practices disclosures can motivate firms to improve their social and governance performance.Originality/valueThe study contributes to the literature by addressing the combined economic effects of social and governance disclosures on firm value, and by investigating the economic effects of such disclosures on firm value in an emerging market.
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Chuk, Elizabeth C. "Economic Consequences of Mandated Accounting Disclosures: Evidence from Pension Accounting Standards." Accounting Review 88, no. 2 (October 1, 2012): 395–427. http://dx.doi.org/10.2308/accr-50320.
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ABSTRACT: I examine whether firms alter their behavior in response to changes in accounting standards that mandate new financial statement disclosures. While prior research suggests that new recognition rules lead to changes in firm behavior, there is limited evidence that disclosure rules can impact firm behavior. This study helps to fill this void in the literature by examining the economic consequences of the mandated disclosures of pension asset composition required under SFAS 132R. Under pension accounting rules, the composition of pension assets is a key determinant of the assumed expected rate of return (ERR) on pension assets. I find that when firms disclose asset composition for the first time under SFAS 132R, firms that were previously using upward-biased ERRs respond by increasing asset allocation to high-risk securities and/or reducing the ERR assumption. While disclosure requirements arguably create less powerful incentives to alter firm decisions than recognition requirements, these findings offer evidence that firms alter behavior in response to disclosure standards. Data Availability: The data used in this study are publicly available from the sources indicated in the text.
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Yordudom, Thanyaorn, and Muttanachai Suttipun. "The Influence of ESG Disclosures on Firm Value in Thailand." GATR Journal of Finance and Banking Review VOL. 5 (3) OCT-DEC. 2020 5, no. 3 (December 22, 2020): 108–14. http://dx.doi.org/10.35609/jfbr.2020.5.3(5).
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Objective – The study aimed (1) to investigate the extent and level of environmental, social and governance (ESG) disclosures of listed companies in Thailand Sustainable Investment (THSI) group from the Stock Exchange of Thailand (SET), and (2) to examine the influence of ESG disclosures on firm value. Methodology/Technique – Population and samples were 60 listed companies in THSI group from the SET. Content analysis by word counting was used to quantify the extent and level of ESG disclosures in corporate annual reporting during 2015 to 2019, while firm value was collected by the market price. Descriptive analysis, correlation matrix, and multiple regression were used to analyze the data from the SET. Findings – As the results, the extent and level of environmental, social, and governance disclosures were 309.91, 1196.12, and 1197.84 average words. The most common ESG disclosure was governance disclosure following by social and environmental disclosures. Moreover, the study found the positive influence of environmental and social disclosures on firm value, while there was a negative influence of governance disclosure on firm value. Novelty – This study is the first THSI group study of ESG disclosure in Thailand. Type of Paper: Empirical Keywords: ESG Disclosures; Firm Value; Thailand. Reference to this paper should be made as follows: Yordudom, T; Suttipun, M. (2020). The Influence of ESG Disclosures on Firm Value in Thailand, J. Fin. Bank. Review, 5 (3): 108 – 114. https://doi.org/10.35609/jfbr.2020.5.3(5) JEL Classification: M40, M41, M48.
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Boone, Audra L., Kathryn Schumann-Foster, and Joshua T. White. "Ongoing SEC Disclosures by Foreign Firms." Accounting Review 96, no. 3 (May 21, 2020): 91–120. http://dx.doi.org/10.2308/tar-2018-0311.
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ABSTRACT We study how home-market reporting requirements and listing choices associate with ongoing SEC disclosures by foreign firms and the investor response. The SEC defers material event and interim financial disclosure obligations to foreign firms' home-market regulator or exchange. We find that a growing number of foreign firms incorporate in disclosure havens and have few or no event-driven disclosure obligations. These firms furnish fewer 6-K disclosures, but experience greater investor interest and market response to each filing. There is little evidence that the SEC substitutes for lower information flow with additional monitoring. Our results indicate that the SEC's one-size-fits-all approach to foreign firm disclosure has led to increasing disparity in information flow, despite the strong demand for and reaction to disclosures by firms from weaker regimes. JEL Classifications: G15; G34; G38.
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Thi Hoang, Thanh Thanh, and Huu Cuong Nguyen. "COVID-19-related disclosures by listed firms in Vietnam." Journal of Financial Reporting and Accounting 21, no. 4 (August 29, 2023): 916–35. http://dx.doi.org/10.1108/jfra-04-2023-0204.
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Purpose This paper aims to measure the COVID-19-related disclosure extent of listed firms in Vietnam and its associated factors. Design/methodology/approach The authors apply a previously developed reporting framework to evaluate the disclosures of 100 listed firms with the largest market capitalization on the Hanoi and Ho Chi Minh stock exchanges as of 31 December 2021. The disclosures were from integrated reports, annual reports, corporate governance reports and financial statements. The authors then used a regression model to examine the factors that influenced the disclosures, such as corporate governance, ownership concentration and firm profiles. Findings The research results reveal that the extent of COVID-19-related disclosure in Vietnam is relatively low. It also finds that the audit committee, firm size, age and industry are positively associated with the extent of COVID-19-related disclosure. Originality/value To the best of the authors’ knowledge, this study is the first to examine COVID-19-related disclosures of listed companies in Vietnam and their determinants. It contributes significantly to the empirical evidence in this field. The findings of this study can help corporate managers and policymakers to improve information disclosure practices during future financial crises.
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Biswas, Pallab K., Helen Roberts, and Rosalind H. Whiting. "The impact of family vs non-family governance contingencies on CSR reporting in Bangladesh." Management Decision 57, no. 10 (November 11, 2019): 2758–81. http://dx.doi.org/10.1108/md-11-2017-1072.
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Purpose Based on the socioemotional wealth (SEW) perspective and agency theory, the purpose of this paper is to examine how the introduction of the 2006 Corporate Governance (CG) Guidelines and family governance affected the level of the corporate social responsibility (CSR) reporting of non-financial companies in Bangladesh. Design/methodology/approach The authors use multivariate regression to analyse 2,637 firm-level annual observations, from 1996 to 2011 annual reports of Bangladeshi publicly listed non-financial-sector companies, to investigate how firm-level CG quality affects CSR disclosure in family and non-family firms. Findings CG quality significantly increases the level of CSR disclosure and this relationship is stronger prior to the new CG Guidelines. Family firms’ CSR reporting levels are significantly lower than non-family firms’, and this effect is stronger after the change in the CG Guidelines. CEO duality, the presence of an audit committee and profitability improve family-firm CSR reporting in Bangladesh, while non-family CSR disclosures are positively associated with board size and firm competition. Board independence is not related to CSR disclosure. Originality/value The authors provide evidence of the benefit of the CG Guidelines’ introduction on company CSR disclosure in an emerging economy and the importance of specific governance mechanisms that differentiate family and non-family-firm CSR disclosures in Bangladesh using a SEW framework.
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Kent, Pamela, and Mark Molesworth. "Incidence and incentives for the voluntary disclosure of employee entitlement information encouraged under AASB 1028." Corporate Ownership and Control 3, no. 4 (2006): 80–87. http://dx.doi.org/10.22495/cocv3i4p6.
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This paper examines the determinants of voluntary disclosure by firms of employee entitlement actuarial assumptions under AASB 1028. It draws on proprietary costs of information and stakeholder theory to make predictions about factors, which influences the disclosure of the actuarial assumptions. This framework is chosen after a review of alternative theories used to investigate voluntary disclosure. It is found that disclosure is negatively related to the power of firms’ employees, and firm economic performance. Disclosures are weakly, positively related to firm size in the multivariate model.
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Eiler, Lisa, and Lisa A. Kutcher. "Disclosure Decisions Surrounding Permanently Reinvested Foreign Earnings." Journal of the American Taxation Association 36, no. 2 (April 1, 2014): 101–16. http://dx.doi.org/10.2308/atax-50805.
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ABSTRACT We examine the determinants of disclosure decisions relating to the unrecognized deferred tax liability on permanently reinvested earnings (PRE). Prior research shows firm value is lower when firms disclose an estimated deferred tax liability for PRE, suggesting investors find this information useful. Since accounting rules provide managers with flexibility in disclosures about the estimated tax liability on PRE, managers may have discretion in the level of transparency related to these disclosures. We find that transparency relating to disclosures about the unrecognized deferred tax liability on PRE is decreasing in the complexity of the tax calculation. We find that disclosure transparency is increasing in the size of the estimated tax liability on hypothetical repatriation of PRE. However, we do not find that disclosure is more transparent when the tax department is more sophisticated or of higher quality. We predict, but do not find, that disclosure transparency is positively related to the overall disclosure environment of the firm. JEL Classifications: G30.
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Singla, Himani, and Vijay Singh. "Voluntary Disclosures and their Drivers: A Study of MDA Reports in India." Organizations and Markets in Emerging Economies 15, no. 1(30) (May 29, 2024): 127–45. http://dx.doi.org/10.15388/omee.2024.15.7.
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The aim of this study is to examine the impact of corporate characteristics on voluntary disclosures of management discussion and analysis (MD&A) reports in India. Using a formal tone, the data was extracted from the annual reports of the top 100 listed firms available on the CMIE Prowess database for seven years (2016–2022). After excluding 23 companies from the financial and insurance sector, a panel regression method with the assistance of Gretl software was employed to investigate the relationship between the Management Discussion and Analysis Disclosure Index (MDADI) for voluntary aspects and various corporate attributes, with a total of 490 firm years of balanced observations. In India, firms follow the mandatory compliance of the MD&A reports, but voluntary disclosures are somehow those which are not much emphasized but are a good indication of firm performance and their accountability towards their stakeholders (Mayew et al., 2015). Our empirical findings reveal that profitability as a proxy to firm performance has a significant positive relationship with MD&A voluntary disclosures. Further, an insignificant association between VDS (Voluntary Disclosure Score) and the board size, presence of independent directors and firm size was found. This indicates that firm performance plays a significant role in adding more voluntary disclosures in MD&A reports. The possible reason for this could be the use of “Management Impression Strategy” in the MD&A reports, which means managers disclose more only when the firm has earned more and use impressive language to attract stakeholders. The outcomes of this research offer valuable insights for regulators, policymakers, and listed companies in India, aiding in the enhancement of MD&A reporting quality. Additionally, this study provides a roadmap for future research on MD&A reporting quality and corporate attributes in other emerging countries that have similar regulatory frameworks. This paper makes a timely and pertinent contribution to the scholarly discourse by shedding light on the relationship between MD&A disclosures and firm attributes. Its findings provide valuable insights for both academia and industry.
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Hassan, Mohamat Sabri, Majella Percy, and Jenny Goodwin-Stewart. "The transparency of derivative disclosures by Australian firms in the extractive industries." Corporate Ownership and Control 4, no. 2 (2007): 257–70. http://dx.doi.org/10.22495/cocv4i2c2p2.
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This paper investigates the transparency of derivative disclosures of Australian firms in the extractive industries using 1998 to 2001 financial reports. The quality of financial reporting has become a major corporate governance issue since the collapse of prominent companies such as Enron in the United States, HIH Insurance in Australia, and, of particular relevance here, Barings PLC in the United Kingdom, where the losses were caused by derivative instruments. Disclosure transparency is an important component of the quality of financial reporting. We measure transparency based on a disclosure index developed from AASB 1033 Presentation and Disclosure of Financial Instruments. We examine the relationship between transparency and firm characteristics represented by size, performance, growth opportunities, auditor and type of extractive firm. The results indicate that the transparency of derivative disclosures among firms in the extractive industries has increased over the period. However, there is still evidence of non-compliance with the disclosure requirements, especially in relation to net fair value. We find that firm size, price-earnings ratio and debt-to-equity ratio, and to a lesser extent, market-to-book ratio and profitability are associated with disclosure transparency.
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Mai Tran, Ngoc, and Manh Ha Tran. "Corporate social responsibility disclosure and firm performance: Evidence from Vietnam." Investment Management and Financial Innovations 19, no. 3 (July 21, 2022): 49–59. http://dx.doi.org/10.21511/imfi.19(3).2022.05.
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Corporate social responsibility (CSR) is quite a new concept to business and society in Vietnam. Information on CSR reflects a firm’s commitment to ethical behavior in its activities and reputation. However, it is questioned whether the information disclosure has any relationship with firm performance. Employing panel regression of about 200 listed firms on the Vietnam Stock Exchange and space-based measurement of CSR disclosure, the study confirms a positive impact of CSR disclosure on firm performance. Firms use CSR disclosures to indirectly improve their performance. Firms that disclose CSR with greater degree of information experience higher marginal profitability. This finding supports stakeholder theory, legitimacy theory, and signaling theory in using CSR disclosure as a tool to improve firms’ reputation and transparency, maintain long-term operation, and hence improve financial performance. During the COVID-19 pandemic, firms that engage more in CSR will suffer less from the pandemic than firms that do not. Thus, the study implies a promising CSR picture for corporations in Vietnam. Investors, policy makers and any related authorities can utilize these findings to get more insight into the business through CSR disclosures.
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Haddad, Ayman E., Fatima Baalbaki Shibly, and Ruwaidah Haddad. "Voluntary disclosure of accounting ratios and firm-specific characteristics: the case of GCC." Journal of Financial Reporting and Accounting 18, no. 2 (February 7, 2020): 301–24. http://dx.doi.org/10.1108/jfra-04-2019-0055.
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Purpose The purpose of this study is to investigate the voluntary disclosure of accounting ratios in the corporate annual reports of manufacturing firms in the Gulf Cooperation Council (GCC) and determines whether an association exists between voluntary disclosure and firm-specific characteristics namely, size, profitability, leverage, liquidity and efficiency. Design/methodology/approach A sample of 53 GCC listed manufacturing firms and 263 firm-year observations were observed over the period 2011 to 2015. A count data regression (Poisson) with incident rate ratios was used to identify the relationship between firms’ voluntary disclosures of accounting ratios and other firm-specific characteristics. Findings During the period under review, the voluntary disclosure of accounting ratios provided in annual reports of GCC firms were found to be exceedingly low. On average, a GCC company discloses at most two accounting ratios in its annual reports. The results also show that the profitability ratios are the most popularly reported ones. Controlling for family board domination, the results also reveal that structure-related variables (firm size and leverage) are positively associated with accounting ratio disclosures. However, performance-related variables (profitability, liquidity and efficiency) have no significant effect on disclosures. The authors conclude that signaling theory as implied in the performance-related variables is not strongly supported in the GCC region. Originality/value This is the first known study to investigate the disclosure of accounting ratios and its determinants within the context of GCC. The findings of this study could be beneficial to both agents and principals in assessing the associated risks. The study provides regulators and market participants an understanding of the corporate reporting activities of manufacturing firms in the GCC and who accordingly will be able to consider associated policy implementation.
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Asay, H. Scott, W. Brooke Elliott, and Kristina Rennekamp. "Disclosure Readability and the Sensitivity of Investors' Valuation Judgments to Outside Information." Accounting Review 92, no. 4 (September 1, 2016): 1–25. http://dx.doi.org/10.2308/accr-51570.
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ABSTRACT Prior literature suggests that investors react less strongly to information in less readable disclosures. We extend this literature by considering how disclosure readability affects the sensitivity of investors' valuation judgments to the information contained in outside (i.e., non-firm) sources of information. Using an experiment, we present investors with a disclosure containing mixed news about the valence of firm performance, and this disclosure varies in readability. We find that investors who initially view a less readable firm disclosure provide valuation judgments that incorporate the outside information to a greater extent, such that their valuation judgments are more sensitive to whether outside information is relatively more or less supportive of management's positive forward-looking statements. We find evidence that this occurs primarily because investors who view a less readable initial disclosure feel less comfortable evaluating the firm and, in turn, rely more on the outside information. We also find that viewing a less readable firm disclosure indirectly increases the extent to which participants search outside information. Combined, our results suggest that investors' valuation judgments may be more influenced by outside sources of information when managers provide less readable firm disclosures, potentially limiting the extent to which managers can benefit from strategically issuing less readable disclosures to obfuscate poor performance. These findings also imply that investors might over-rely on more readable disclosures while discounting outside sources of information about the firm. Data Availability: Contact the authors.
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Morris, Richard D., and Per Christen Tronnes. "The determinants of voluntary strategy disclosure: an international comparison." Accounting Research Journal 31, no. 3 (September 3, 2018): 423–41. http://dx.doi.org/10.1108/arj-10-2015-0126.
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Purpose The purpose of this paper is to examine the roles of country-level characteristics versus firm-level characteristics in explaining variations in firms’ voluntary strategy disclosures. Design/methodology/approach Strategy disclosure in annual reports is measured using an index of 40 items derived from the strategy literature. The sample is 204 large companies from 12 Asian and European countries in 2005. The disclosure index is subdivided into four underlying latent constructs using principal components analysis. The authors then use OLS regression to test whether total disclosure score, and the latent constructs are associated with country-level characteristics and firm-level characteristics. Findings The authors find that total strategy disclosures are more prevalent in stakeholder-oriented countries, in countries with greater levels of financial transparency, but are less prevalent in countries with a culture of secrecy, and strategy disclosures are more likely to occur in companies with greater economic incentives to disclose, with a Big 4 auditor or which are listed in New York. These findings also occur but not as consistently with the four latent constructs. Research limitations/implications The sample used in this paper comprises large public companies, so the findings may not be generalisable to all companies. Nevertheless, the findings demonstrate that both country- and firm-level variables matter in explaining voluntary strategy disclosure. Practical implications The IASB released an IFRS Practice Statement in 2010, which recommends, but does not require, disclosure of information about corporate strategy in Management Commentary statements. The findings of this paper may help inform the issue of whether regulators should make strategy disclosures mandatory. Originality/value The paper contains the first detailed examination of the roles of country-level characteristics versus firm-level characteristics in explaining variations in corporate voluntary strategy disclosures.
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Kumar Soni, Tarun. "Demystifying the relationship between ESG and SDG performance: Study of emerging economies." Investment Management and Financial Innovations 20, no. 3 (July 3, 2023): 1–12. http://dx.doi.org/10.21511/imfi.20(3).2023.01.
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Companies and investors in emerging markets have started paying attention to ESG (Environmental, Social, and Governance) issues. There has been a growing demand for aligning ESG disclosure of companies to UN SDGs (United Nations Sustainable Development Goals), so understanding how the firm-level ESG affects the country-level SDG is very important for evaluating the advances in ESG and SDG implementation in emerging markets. This study examines the linkage between firm-level ESG disclosures and their relationship with country-level SDG scores over ten years for three emerging countries: India, China, and Brazil. The analysis of 1,500 top-listed firms in these countries reveals an increasing trend of firms going for ESG disclosures and increased ESG scores over the years in the three markets. Out of the total sample, almost 75% of firms make ESG disclosures in Brazil, followed by 54% in India and 32% in China. Additionally, companies in all these countries tend to emphasize governance-related disclosures more, with Brazil having higher ESG disclosures than India and China. The correlation and causality tests indicate a significant positive correlation between mean ESG scores and country-specific SDG scores. The Dumitrescu-Hurlin panel causality tests provide stronger linkages between firm-specific Environment scores and SDG scores, indicating that a firm’s environment disclosures translate into higher SDG scores. However, the same is not valid for Social and Governance factors. These findings have important implications given the global attention on the linkages between ESG disclosure and SDG score. AcknowledgmentsThe financial and infrastructure support provided by FORE School of Management, New Delhi in completing this paper is gratefully acknowledged.
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Bloomfield, Robert J. "A Pragmatic Approach to More Efficient Corporate Disclosure." Accounting Horizons 26, no. 2 (June 1, 2012): 357–70. http://dx.doi.org/10.2308/acch-10261.
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SYNOPSIS This paper uses a Pragmatic theory of language (drawn from philosophy and linguistics) to diagnose the causes of excessive financial disclosure and propose a regulatory solution. The diagnosis is that existing disclosure regulations are one sided, effectively encouraging firms to disclose any information that might be relevant, but failing to discourage disclosure of information that adds little to what investors already know. This one-sidedness limits investors' ability to draw inferences that items the firm chooses not to disclose are not newsworthy (an inference Pragmatic theorists call “implicature”). The solution is to encourage or require firms to supplement comprehensive disclosures with an “elevated” disclosure that is brief enough to force firms to be selective in choosing what information to include. Regulations can enhance implicature through rules that prohibit firms from elevating disclosures that are less newsworthy than disclosures that are not elevated.
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Entwistle, Gary M. "Exploring the R&D Disclosure Environment." Accounting Horizons 13, no. 4 (December 1, 1999): 323–42. http://dx.doi.org/10.2308/acch.1999.13.4.323.
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In this exploratory study, a series of interviews with analysts and firm executives, supplemented with an analysis of annual report disclosures, is used to provide insights into the research and development (R&D) disclosure environment within which technology-intensive firms operate. The interviews cover questions of interest to both professional and academic accounting audiences, including the types of R&D information which firms reveal and analysts use, managers' concerns with revealing proprietary or bad news R&D information, the potential benefits from effective R&D disclosure management, and views on deferring vs. expensing development expenditures. The content analysis provides a description of the quantity, subject matter, and location of the R&D disclosures contained in 113 Toronto Stock Exchange-listed firms' annual reports. Finally, the regression analysis explores the association between six disclosure environment factors (R&D expense proportion, accounting policy for development expenditures, [cross-] listing status, industry, capital structure, and firm size) and the amount of R&D disclosure firms provide.
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Wuttichindanon, Suneerat, and Panya Issarawornrawanich. "Determining factors of key audit matter disclosure in Thailand." Pacific Accounting Review 32, no. 4 (November 26, 2020): 563–84. http://dx.doi.org/10.1108/par-01-2020-0004.
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Purpose In Southeast Asia, auditors play a crucial role in the quality of financial reports. With the introduction of a new format of auditors’ report that requires disclosure of key audit matters (KAM), the disclosure practice of auditors is, thus, of great interest. Specifically, this study aims to investigate the factors that auditors take into consideration when issuing KAMs. Design/methodology/approach The research design is quantitative, with a focus on the number of KAM disclosures issued by auditors. As existing studies rely on the number of KAM disclosures in the analysis, this current research, thus, uses the quantity of KAM disclosures for comparison purposes. The analysis relies on secondary data and multiple regression analysis is used to establish the association between the number of KAM disclosures and three groups of determining factors, namely, auditor characteristics, corporate governance mechanisms and firm characteristics. Findings The significant determining factors of KAM disclosure include auditor’s litigation risk, firm complexity, profitability and industry type. Firms using a Big 4 audit firm, firms with many subsidiaries and firms in the technology, property and construction and finance industries have higher numbers of KAMs, while highly profitable firms issue lower numbers of KAMs. As for corporate governance mechanisms, the number of KAMs is significantly positively correlated with the number of independent directors (p < 0.10). Originality/value This research includes key corporate governance parties in the examination, including external auditors, independent directors and audit committees. The finding affirms the influence of Big 4 on KAM disclosure in Southeast Asia, while their roles are not significant in Western samples. The result also unearths the monitoring role of independent directors in KAM disclosure. The role of the audit committee in KAM disclosure is insignificant in Thai samples, while the committee role is statistically significant in the Western samples. Variations in the findings between this study and previous research could be attributed to differences in institutional settings between both regions.
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Saleh Altarawneh, Mohammad. "The impact of environmental disclosure on value relevance: Moderating role of environmental performance." Environmental Economics 14, no. 2 (September 18, 2023): 69–86. http://dx.doi.org/10.21511/ee.14(2).2023.06.
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Existing research lacks to adequately examine how environmental performance moderates the influence of environmental disclosure on value relevance. This study pursues to investigate the direct influence of environmental disclosures on value relevance, measured by the fair value of common equity. Moreover, it tests how environmental performance moderates the influence of environmental disclosures on value relevance.Data were gathered from the annual reports of Jordanian industrial firms listed on the Amman Stock Exchange from 2018 to 2021. The study employed the Ohlson model to assess the value relevance. Furthermore, both earnings and the book value of equity were included as other independent variables, as required by the model.This study found that environmental disclosures positively impact the value relevance of industrial firms listed on the Amman Stock Exchange. Moreover, such disclosures positively influence the value relevance of industrial firms with greater environmental performance. Earnings and the book value of equity also positively influence the value relevance. The results were similar to those obtained by conducting panel regression after controlling for both the industry and year effects.It is therefore recommended that directors exploit environmental disclosures to increase the value relevance of the firm. At the same time, they should consider environmental disclosures as an essential component to integrate into future strategies. Hence, firm managers should consistently evaluate the environmental and financial performance, followed by developing well-designed strategies to increase the environmental performance and reliability of environmental disclosure due to their positive role in enhancing value relevance.
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Alfaraih, Mishari M., and Faisal S. Alanezi. "What Explains Variation In Segment Reporting? Evidence From Kuwait." International Business & Economics Research Journal (IBER) 10, no. 7 (June 22, 2011): 31. http://dx.doi.org/10.19030/iber.v10i7.4665.
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The purpose of this study is to evaluate both the segment disclosure practice of firms listed on the Kuwait Stock Exchange (KSE) and the factors that influence their level of segment disclosures. Consistent with prior disclosure research, the level of segment disclosure is examined using a disclosure index based on the mandatory requirements of International Accounting Standard (IAS) 14 (Segment Reporting). The results show that the average level of segment disclosure in a sample of 123 KSE-listed firms in 2008 was 56%%, ranging from 18% to 94%. Users of KSE-listed firms financial statements might reasonably expect greater segment disclosures from larger, older, highly leveraged, and profitable KSE-listed firms, as well as from firms audited by a Big-4 audit firm. The findings provide feedback to the regulatory and enforcement bodies in Kuwait on current segment disclosure practice among KSE-listed companies and the factors that influence the level of segment disclosures. The noticeable variation in the level of segment disclosure among listed firms suggests a need for further monitoring of the enforcement of required segment disclosure.
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Sahore, Nidhi Sharma, and Anshul Verma. "Corporate disclosures and firm characteristics: A study of the emerging market listed companies." Corporate Ownership and Control 19, no. 1 (2021): 42–54. http://dx.doi.org/10.22495/cocv19i1art4.
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The objective of this study is to understand whether firm characteristics explain the extent of corporate disclosures in the annual reports of listed Indian companies. In the field of accounting, voluntary information disclosures have been receiving a lot of attention as they bridge the gap between what is mandatory and what is sought by the stakeholders. Due to the prime focus of corporate disclosure literature on the linkage of company characteristics with the extent of disclosures, it becomes pertinent to study this aspect before studying the policy and regulatory impact. Hence, it is examined what prompts listed corporate entities in an emerging market like India to disclose more. The disclosure scores of Indian CNX 100 companies over a period of five years (2011–2015) related to firm characteristics such as age, size, and listing status were arrived at through content analysis and subsequent coding of the data. The study applied correlation, regression, and t-test to analyze respective scores and firm-specific data accessed from CMIE Prowess and Ace Equity industry databases. The study found firm characteristics such as age and listing status to be non-significant in leading corporations to enhanced disclosures. However, regression results improving with respect to the firm size and almost becoming significant in later years especially in the post-policy period (i.e., post-2013) remains an important takeaway from this study. The study stands on a formidable ground that it is the policy initiatives that are pushing firms to reveal more about their businesses keeping in mind the diverse perspectives of accounting information users
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Epping, Lori L., and W. Mark Wilder. "U.S.-Listed Foreign Firms' Non-GAAP Financial Performance Disclosure Behavior." Journal of International Accounting Research 10, no. 2 (November 1, 2011): 77–96. http://dx.doi.org/10.2308/jiar-10080.
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ABSTRACT The purpose of this study is to observe the extent to which U.S.-listed foreign firms report non-GAAP financial performance measures and to compare the characteristics of these disclosures to those of U.S. firms. Using a matched-sample design, this research compares U.S.-listed foreign firm and U.S. firm non-GAAP disclosure frequency, non-GAAP disclosure adjustment characteristics, and reconciliation quality. Tests of the hypotheses indicate similar disclosure frequencies for U.S. firms and U.S.-listed foreign firms. Analyses of non-GAAP disclosure and adjustment characteristics provide evidence consistent with the interpretation that U.S. firms engage in aggressive non-GAAP reporting behaviors (reporting income-increasing adjustments and adjusting GAAP numbers with a greater magnitude and with a higher number of adjustments) equally or more so than U.S.-listed foreign firms. However, the quality of U.S. firm reconciliations to U.S. GAAP is equal to or greater than that of U.S.-listed foreign firms.
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Atasel, Oğuz Yusuf, Yusuf Güneysu, and Hüseyin Ünal. "Impact of Environmental Information Disclosure on Cost of Equity and Financial Performance in an Emerging Market: Evidence from Turkey." Ekonomika 99, no. 2 (December 11, 2020): 76–91. http://dx.doi.org/10.15388/ekon.2020.2.5.
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Financial instability, financial crises, and business frauds cause a loss of society confidence on firms. Similarly, the economic uncertainty increased as a result of the social problems, such as rapid consumption of natural resources, climate change, water scarcity, violation of human rights. For these reasons, the reliability and validity of the reports published by firms have been questioned. Firms make voluntary disclosures, such as environmental, social, sustainability, in order to overcome these problems and gain trust of investors. In this context, the purpose of this study is to explore the impact of information disclosure, including environmental disclosures, within the context of sustainability on the cost of equity (COE). At the same time, the study examines the effect of information disclosure on financial performance in terms of firm value and profitability. In doing so, the study employs BIST100 data of non-financial firms from 2010 to 2019, and uses panel regression models for Turkey. As a result, it was found that information disclosure negatively impacts the COE while positively affecting firm value and profitability.
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Firmansyah, Amrie, Mitsalina Choirun Husna, and Maritsa Agasta Putri. "Corporate Social Responsibility Disclosure, Corporate Governance Disclosures, and Firm Value In Indonesia Chemical, Plastic, and Packaging Sub-Sector Companies." Accounting Analysis Journal 10, no. 1 (March 5, 2021): 9–17. http://dx.doi.org/10.15294/aaj.v10i1.42102.
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This study aims to examine environmental disclosure, social disclosure, economic disclosure, and corporate governance disclosures on the firm value in Indonesia. This study uses a quantitative method with multiple regression. This study employs data from chemical, plastic, and packaging sub-sector companies which listed in the IDX. After purposive sampling was conducted, the final sample consists of eleven companies from 2016 up to 2019. The result suggests that environmental disclosure positively affects firm value. Meanwhile, economic and social disclosures do not affect firm value. Also, the disclosure of corporate governance does not affect firm value. The companies should consider that environmental activities as a strategy for the company, and these activities show that the company's success in the capital market is related to investors' positive response.
Keywords: Corporate Governance, Economic, Environmental, Social, Disclosure
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Saraswati, Erwin, Alfizah Azzahra, and Ananda Sagitaputri. "Corporate Governance Mechanisms and Voluntary Disclosure." AKRUAL: Jurnal Akuntansi 11, no. 2 (October 14, 2020): 82. http://dx.doi.org/10.26740/jaj.v11n2.p82-94.
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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.
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Alnabsha, Abdalrhman, Hussein A. Abdou, Collins G. Ntim, and Ahmed A. Elamer. "Corporate boards, ownership structures and corporate disclosures." Journal of Applied Accounting Research 19, no. 1 (February 12, 2018): 20–41. http://dx.doi.org/10.1108/jaar-01-2016-0001.
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Purpose The purpose of this paper is to investigate the effect of corporate board attributes, ownership structure and firm-level characteristics on both corporate mandatory and voluntary disclosure behaviour. Design/methodology/approach Multivariate regression techniques are used to estimate the effect of corporate board and ownership structures on mandatory and voluntary disclosures of a sample of Libyan listed and non-listed firms between 2006 and 2010. Findings First, the authors find that board size, board composition, the frequency of board meetings and the presence of an audit committee have an impact on the level of corporate disclosure. Second, results indicate that ownership structures have a non-linear effect on the level of corporate disclosure. Finally, the authors document that firm age, liquidity, listing status, industry type and auditor type are positively associated with the level of corporate disclosure. Research limitations/implications Future research could investigate disclosure practices using other channels of corporate disclosure media, such as corporate websites. Useful insights may be offered also by future studies by conducting in-depth interviews with corporate managers, directors and owners regarding these issues. Practical implications The evidence relating to the important role that corporate governance mechanisms play in shaping the expectations relating to the level of corporate voluntary and/or mandatory disclosures may be useful in informing investor decisions, as well as future policy and regulatory initiatives. Originality/value This paper contributes to the existing literature by examining the governance-disclosure nexus relating to both mandatory and voluntary disclosures in both listed and non-listed firms operating in a developing country setting.
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Malone, David, Clarence Fries, and Thomas Jones. "An Empirical Investigation of the Extent of Corporate Financial Disclosure in the Oil and Gas Industry." Journal of Accounting, Auditing & Finance 8, no. 3 (July 1993): 249–73. http://dx.doi.org/10.1177/0148558x9300800306.
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The principal research question addressed by the study was: Are there identifiable and measurable factors that are associated with the extent to which firms in the oil and gas industry disclose financial information? Extent of financial disclosure was measured by using a weighted index of disclosure items. The 10-K and annual reports of 125 oil and gas firms were examined in order to identify various financial disclosures provided by each firm. This set of disclosures was weighted by oil and gas financial analysts according to the importance of each disclosure in an investment decision. The items of information provided by an individual firm were then applied to the index. The dependent variable, extent of financial disclosure, was the ratio of a firm's total disclosure score to the firm's total possible disclosure. A stepwise regression model was used to determine which variables were “best” in explaining extent of financial disclosure. Of the ten independent variables entered, four were retained in the final model at the .20 level of significance: exchange listing status, audit firm size, ratio of debt to total equity, and number of shareholders. The final model was examined for the significance of parameter estimates. Three variables—listing status, ratio of debt to total equity, and number of shareholders—were determined to be statistically significant.
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Pinsker, Robert, and Patrick Wheeler. "The Effects of Expanded Independent Assurance on the Use of Firm-Initiated Disclosures by Investors with Limited Business Knowledge." Journal of Information Systems 23, no. 1 (March 1, 2009): 25–49. http://dx.doi.org/10.2308/jis.2009.23.1.25.
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ABSTRACT: While increased disclosure is helpful in reducing information asymmetry, investors tend to discount firm-initiated disclosures due to the perception that management may be biased, resulting in lower stock prices. To reduce the perception of bias, assurances by independent auditors can be attached to firm disclosures not typically covered by the traditional audit. However, until recently, it was not technologically feasible to have independent assurances accompany all firm-initiated disclosures (i.e., expanded assurance). In an experimental study, we investigate whether having assurances accompany all firm disclosures will be perceived by nonprofessional investors with limited business knowledge as helpful in reducing investment risk. We use liberal arts students as proxies for these investors. Findings suggest that participants discount share prices for perceived bias in firm-initiated disclosures in the absence of independent assurance; however, in the presence of such assurance, participants significantly increase share prices. Mixed support is found for assurance reducing investor variation.
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Akintunde, OGUNSOLA E., Emmanuel Kayode DANIEL, and ORBUNDE Benshima. "Moderating Role of Board Independence on the Effect of Environmental and Governance Sustainability Disclosure on Firm Value of Listed Non-Financial Firms in Nigeria." International Journal of Research and Innovation in Social Science VIII, no. IV (2024): 2700–2718. http://dx.doi.org/10.47772/ijriss.2024.804257.
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A corporation’s worth may draw the attention of a variety of stakeholders, and preserving its long-term survival requires overcoming multiple hurdles, most notably the implementation of robust disclosures about environmental and governance sustainability. This study looked at how Board independence affected the link between environmental and governance sustainability disclosures and the total value of Nigerian listed non-financial firms over a decade (2012-2021). Using purposive selection, 69 firms were chosen from a population of 104 to use in a longitudinal study design. Data from the company’s annual reports were evaluated using regression analysis. The Governance Disclosure Index (GDI) and the Environmental Disclosure Index (EDI) were used as proxies for disclosures on governance and environmental sustainability, respectively, while Tobin’s Q was used to represent corporate value. The findings revealed that environmental sustainability disclosure, particularly when moderated by board independence, significantly influenced the firm value of Nigerian listed non-financial companies, whereas governance sustainability disclosure had a significant impact on firm value on its own. As a result, the research recommends that businesses encourage more sustainability transparency via rating and evaluation methods. Furthermore, they should be proactive in developing and executing governance and environmentally friendly policies and programs, since these efforts are critical to increasing their total worth.
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Badia, Marc, Mary E. Barth, Miguel Duro, and Gaizka Ormazabal. "Firm Risk and Disclosures about Dispersion of Asset Values: Evidence from Oil and Gas Reserves." Accounting Review 95, no. 1 (May 1, 2019): 1–29. http://dx.doi.org/10.2308/accr-52445.
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ABSTRACT The question we address is whether mandated disclosure about dispersion of nonfinancial asset values can provide information relevant to assessing firm risk. Using a sample of Canadian oil and gas (O&G) firms between 2004 and 2011, we find that the difference between the disclosed 10th and 50th percentiles from the O&G reserves distribution, which measures dispersion of the distribution, is positively associated with future total and idiosyncratic equity return volatility, systematic risk, and credit risk. We also find that disclosure of increased reserves dispersion is associated with weaker stock price reactions to increases in reserves and with increases in bid-ask spreads, both of which indicate the disclosures convey information about risk associated with reserves. Additional tests reveal little evidence of managerial opportunism in the reserves disclosures. Taken together, our evidence suggests that quantitative disclosures about the dispersion of nonfinancial asset values can provide information relevant to assessing firm risk.
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Braam, Geert, and Lex Borghans. "Board and auditor interlocks and voluntary disclosure in annual reports." Journal of Financial Reporting and Accounting 12, no. 2 (September 30, 2014): 135–60. http://dx.doi.org/10.1108/jfra-11-2012-0054.
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Purpose – The purpose of this study is to explore whether interlock ties between the board of directors and the external auditors facilitate the cross-firm diffusion of voluntary disclosures in annual reports. Design/methodology/approach – Using a sample of 149 non-financial companies publicly listed on the New York Stock Exchange (NYSE) Euronext Amsterdam, we use ordinary least squares (OLS) regression analysis to examine the relationships between the incidence of financial and non-financial voluntary disclosures in the focal firms’ annual reports and the annual reports of other companies to which the firms are related via the interlock ties of its board members and external auditor. Findings – The results show significant associations between financial and non-financial voluntary disclosures in the focal and related firms’ annual reports when there were board interlocks. Differences in the diffusion of specific types of disclosures are found depending on the type of interlocking director. The results also show that interlock ties of the external auditors positively influence the associations with voluntary financial disclosures in the annual reports. Practical implications – We find clear indications that board and auditor interlocks form important sources of inter-organisational information exchange that can drive changes in voluntary disclosure practices in annual reports. The networks of social relationships between firms may play a significant incremental role in the cross-firm diffusion of corporate voluntary disclosure practices, particularly in complex and ambiguous situations. Originality/value – This paper is the first empirical study to investigate how board and external auditor interlock ties are related to the levels of financial and non-financial voluntary disclosures in the focal and related firms’ annual reports.
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Triwacananingrum, Wijaya, Rahmawati ., Djuminah ., and Agung Nur Probohudono. "Does Business Ethics Disclosure Contribute to ESG Disclosure and ESG Performance on Firm Value?" Journal of Ecohumanism 3, no. 4 (July 28, 2024): 816–33. http://dx.doi.org/10.62754/joe.v3i4.3572.
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Purpose: This study investigates whether Business Ethics Disclosure (BED) contributes to Environmental, Social, and Governance (ESG) disclosure and ESG performance, and how these factors influence firm value.Methods: Using data from publicly traded companies listed on the Indonesia Stock Exchange (IDX), we employ multiple regression analysis to examine the relationships between BED, ESG disclosure, ESG performance, and firm value.Findings: Our results indicate that BED significantly moderates the relationship between ESG disclosure and firm value. While ESG disclosure alone does not consistently impact firm value, the inclusion of BED enhances the positive effects of ESG practices on firm valuation.Novelty: This study contributes to the literature by highlighting the moderating role of business ethics in the ESG performance-firm value nexus, offering new insights into the interplay between ethical disclosures and ESG outcomes.Research Implications: The findings suggest that companies should integrate ethical disclosures into their ESG strategies to improve firm valuation. Policymakers and regulators are encouraged to establish comprehensive reporting standards that include ethical practices to enhance transparency and investor confidence.
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Bokpin, Godfred A., Zangina Isshaq, and Eunice Stella Nyarko. "Corporate disclosure and foreign share ownership: empirical evidence from African countries." International Journal of Law and Management 57, no. 5 (September 14, 2015): 417–44. http://dx.doi.org/10.1108/ijlma-01-2014-0004.
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Purpose – The study aims to seeks to ascertain the impact of corporate disclosure on foreign equity ownership. Corporate disclosures are important to for stock markets because it is an activity that mitigates information differences between company insiders and outsiders. Design/methodology/approach – Corporate disclosures assume an even greater important when company outsiders are not domiciled in the same country as the company and the company insiders. In this study, the relation between foreign share ownership and corporate disclosures using data on Ghana, Kenya and Nigeria is examined. Findings – The consistent results in this study are that foreign share ownership is positively related to firm size. A negative relation, however, between foreign share ownership and corporate disclosure is found, but this turns out to be related to disclosures about ownership, while disclosures on financial reporting and board management have a positive and insignificant statistical relation taking into account unobserved country, time and firm effects. Further analysis shows that corporate disclosures are very persistent and negatively related to lag foreign share ownership. No consistent statistical relation is found between disclosure and market-to-book values as a proxy for investment opportunities. It is recommended to African-listed firms to pursue adoption of high-quality financial reporting standards and to increase their reporting on board management. The study also recommends that the African Government weighs the benefits of detailed ownership disclosures. Originality/value – The study utilises frontier market data to complement existing literature on how corporate disclosure and transparency influences foreign investors decision to invest in Africa.
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Firmansyah, Amrie, Navelya Hadi, Sheila Sheila, and Estralita Trisnawati. "RESPON PASAR ATAS PENGUNGKAPAN KEBERLANJUTAN PADA PERUSAHAN PERBANKAN DI INDONESIA: PERAN UKURAN PERUSAHAAN." Bina Ekonomi 25, no. 2 (January 4, 2022): 190–204. http://dx.doi.org/10.26593/be.v25i2.5339.97-111.
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This study examines the effect of sustainability disclosure on firm value and examines the moderating role of firm size in the association between sustainability disclosure and firm value. This research data uses data and information on financial statements and stock prices of financial sector companies in the banking sub-sector listed on the Indonesia Stock Exchange. Data obtained from www.idx.co.id and www.finance.yahoo.com with an observation period of 2018-2020. Based on purposive sampling, this study obtained a total sample of 47 observations. Hypothesis testing is done by multiple linear regression. The results show that the disclosure of sustainability reports does not affect firm value. In addition, firm size does not have a role in strengthening the effect of sustainability disclosure on firm value. This research indicates that the Financial Services Authority needs to develop sustainability disclosures under globally applicable standards. In addition, the Indonesia Financial Services Authority needs to supervise the implementation of sustainability disclosures carried out by companies in the banking sub-sector in Indonesia.
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Al-Dah, Bilal, Mustafa Dah, and Mohammad Jizi. "Is CSR reporting always favorable?" Management Decision 56, no. 7 (July 9, 2018): 1506–25. http://dx.doi.org/10.1108/md-05-2017-0540.
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Purpose In addition to their profit maximization objective, firms are often challenged to meet environmental and social demands. The purpose of this paper is to test whether a firm’s macroeconomic environment moderates the efficiency of its social and environmental disclosures. Design/methodology/approach The study uses the Bloomberg database to collect data on the FTSE 350 listed firms for the years 2007-2012. The sample is split into crisis and post-crisis periods, to study the investor reaction to social disclosures under different economic conditions. Findings The results suggest that the effect of corporate social responsibility (CSR) disclosure on future firm performance depends on the surrounding macroeconomic environment. During tight economic situations, market participants become more self-centered and penalize firms diverting scarce resources toward non-profitable societal engagements. Moreover, the findings indicate that firms with a high participation of outside directors and low accounting profit experience negative future performance when engaging in social disclosures during times of crisis. Practical implications Corporate governance is a system of interconnected practices that is affected by various firm and environmental characteristics. The results are in line with the premise that, depending on macroeconomic changes and specific firm attributes, CSR reporting may have dissimilar implications across different situations and conditions. Social disclosures and engagements are not always favorable, and should only be utilized in non-recessionary periods by firms possessing certain characteristics in terms of board composition and accounting profitability. Originality/value This study identifies key moderating variables which present additional obstacles for firms engaging in CSR during adverse economic conditions. Outsiders’ inferior firm-specific expertise, along with the firm’s poor accounting performance, present additional financial constraints for firms engaging in CSR activities during economic downturns.
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Palmer, Richard J., and Thomas V. Schwarz. "Improving the FASB's Requirements for Off-Balance-Sheet Market Risk Disclosures." Journal of Accounting, Auditing & Finance 10, no. 3 (July 1995): 521–40. http://dx.doi.org/10.1177/0148558x9501000306.
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This paper discusses the requirements and limitations associated with SFAS No. 105 market risk disclosures, empirically examines the current implementation of SFAS No. 105 in the financial disclosures of financial institutions, and proposes improvements to the market risk disclosures presently required by the FASB. The results of the empirical analysis of 35 large U.S. financial institutions show that (1) many firms indicated a concern that statement users are not able to clearly distinguish between required contract dollar amount disclosures and actual risks; (2) although most firms use instruments with OBS risk for proprietary hedging and trading, no firm provides a useful detailed breakdown of the degree of risk attributable to these different activities; (3) the greatest conformity in reporting occurs in those firms with the largest contract dollar volume (in absolute terms and as a percent of equity); and (4) very few firms take any initiative in the reporting of additional disclosures. In light of these findings, this paper proposes a new method of market risk disclosure that is based on the margin required by exchanges and their Clearing Corporations. Margin disclosure is shown to be superior to SFAS No. 105 requirements in that it (1) directly correlates with the true risk of a firm's position, (2) is based on the entire financial position of a firm, (3) is easily obtained for even the most complex financial positions, (4) is dynamic in response to changing market conditions, (5) is determined by an independent third party whose main interest is the measurement of market risk, and (6) is a numeric rather than descriptive measure.