The Effect of Voluntary Disclosure of Non-financial Performance Indicators on Company Valuation Judgements: an Experimental Analysis PDF Download
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Author: Paul James Coram
Publisher:
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Languages : en
Pages :
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Author: Paul James Coram
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Category :
Languages : en
Pages :
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Author: Paul James Coram
Publisher:
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Category : Disclosure in accounting
Languages : en
Pages : 358
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Author: Olga Cucaro
Publisher: Olga Maria stefania Cucaro
ISBN:
Category : Business & Economics
Languages : en
Pages : 255
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THE EVALUATION OF FINANCIAL RISK PROFILE OF THE COMPANIES AND THE MANDATORY DISCLOSURE ON LIQUIDITY AND CREDIT RISK is a work born from a careful study of the evolution of the Italian and European legislation on the subject of financial risk communication and in particular of IFRS 7, Finacial Instruments: Disclosure. Thanks to this international accounting standard, Italian listed companies have included a greater number of disclosures on financial risks in their financial statements, but while there is no doubt the quantitative increase in information, the qualitative value of this communication is doubtful. In this regard, the study analyzes the usefulness of the disclosure introduced by IFRS 7 for financial analysts. The choice of analysts is a natural choice due to the importance they hold as intermediaries in the communication channel between companies and the market.
Author: Ata Alloh Mohammadi
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Special committee of the AICPA on financial reports has urged disclosure of related non-financial performance measurers and forward-looking information to addition customary financial reports (AICPA, 2002). This study shows an experiment that examines whether additional disclosure of non-financial performance measurement (R&D) impact on individual Investors' net earnings estimates. An experiment was directed applying investors who were prepared with a hypothetical firm's annual report. The experiment presented to include two levels (additional disclosure positive non-financial performance (R&D), negative non-financial performance (R&D) 1 (financial statements only as control group) between-subjects design. The individual investors with high education and knowledge reacted to the negative and positive information, as anticipated from the prior research. The results show that the value of positive additional disclosure of non-financial performance (R&D) may not overflow in an equal manner to all users of financial statements. It also indicates that regulatory intervention to additional disclosure to all investors may not have the desired effect if cognitive biases, and lack of task-specific knowledge, adversely affect their decision-making. I provided in advance proof on disclosures that can help individual investors. When my experiment sets convergent proof of the impact of these disclosures in a controlled setting, in addition, it prepares fresh proof that the differences in investors' appraisals are probably involuntary, caused by reminder bound. This study found that additional disclosures non-financial performance (R&D) improve individual investors decision making, although these disclosures are superfluous with data in the initial financial reports.
Author: Patrick Roy
Publisher: diplom.de
ISBN: 3832448292
Category : Business & Economics
Languages : en
Pages : 141
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Abstract: In a first step, this ERP derives the theoretical necessity to provide voluntary strategic and non-financial Information. It is argued that companies are an integral part of a common environment and society, acting in a framework of interdependent relationships. A company is more and more seen as a community of interests of different groups, and it can only act in an optimal way if the demands of all groups are taken into account and its behaviour is adjusted accordingly. In this context, interest groups' demands for company Information depend an the possibilities of improvements in decision making or monitoring that arise with its use, which in turn is mainly determined by the potential of Information to reduce uncertainty in the areas of interest. For external decision-makers, uncertainty often arises from sources about which conservative company statements provide little insight. Due to the traditional, finance-oriented concept of disclosure, this is particularly true for strategic and non-financial aspects. Related additional Information that is voluntarily provided can considerably reduce uncertainty, even more so as part of audited statements. Conventional financial reporting and existing disclosure requirements will generally not nearly satisfy those information needs of user groups. Any economic action, though, should only be taken if related benefits are exceeding related costs. This priority of economicalness also holds for companies' production, processing and disclosure of Information. Therefore, it is necessary to consider as detailed as possible potential opportunities and disadvantages for voluntarily disclosing company Information both an and outside capital markets. This is done in a second major part of the present work. First, voluntary disclosure can potentially affect share prices and thereby the market value of the firm, markets not being strong-form efficient. So, by giving company Information, a higher market value can directly be induced, thereby potentially lowering the cost of capital which, for example, improves the company's competitive position in the battle for cheap additional financing. [...]
Author: Lei Dong
Publisher:
ISBN:
Category :
Languages : en
Pages :
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This dissertation investigates investors' reliance on corporate voluntary disclosures of nonfinancial information through two studies consisting of three experiments.
Author: Ling Tuo
Publisher:
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Category :
Languages : en
Pages :
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The importance of an effective corporate communication with all stakeholders including shareholders has been extensively debated in the business literature in the aftermath of 2007-2009 global financial crisis. The key indicator of business value have shifted from accounting profits and stock market performance, formerly, to firm reputation and sustainability performance, currently. Therefore, the transparency and value-relevance of conventional financial reporting has been questioned in terms of its capability to satisfy increasing information needs of all stakeholders. Many doubt whether those traditional financial metrics derived from financial statements can appropriately capture firm & rsquo;s long-term value creation ability. In recent years, users of corporate reports are demanding more relevant financial and non-financial on key performance indicators and forward looking information above and beyond conventional financial statements. To satisfy the demands of information users and decision makers, companies are expected to not only increase their reporting transparency in conventional financial statements but also disclose more inside information to outside public through different types of voluntary disclosure. The first dissertation investigates the role of sustainability report through examining the associations among voluntary disclosure, earnings quality and audit fee. Recently more and more firms begin to release sustainability reports, one important channel of voluntary disclosure, to satisfy the needs of information users and increase the transparency of financial reporting. In this paper, I especially examine the effect of voluntary disclosure quality on those associations. Through Difference-in-Difference test, I find that the release of sustainability report is positively correlated with innate earnings quality and negatively correlated with discretionary earnings quality. Moreover, the positive (negative) correlation between sustainability report and innate (discretionary) earnings quality is more (less) pronounced when the voluntary disclosure quality is high. I also find that the release of sustainability report is associated with higher audit fees and thus it suggests that the sustainability report cannot substitute the traditional financial statement. My conclusions are robust through additional tests of OLS regressions. This paper has important political, academic and industry application. The second dissertation investigates how the firm & rsquo;s cost stickiness strategy is associated with the firm & rsquo;s management earnings forecast (MEF). I conjecture that the managerial incentive regarding the cost strategy and voluntary disclosure strategy are interdependent. When managers choose their cost management, they will also choose the corresponding management earnings forecast strategy to align their interests. Through the empirical tests with a sample between year 2005 and 2011, I find that the firm & rsquo;s level of sticky cost is positively associated with the firm & rsquo;s propensity to issue MEF and the frequency of MEF. Moreover, I find that the firm & rsquo;s level of sticky cost is associated with more good earnings news forecasted by managers. Finally, I find that the relation between cost stickiness and MEF behaviors is more pronounced when the MEF is long-horizon oriented and when the firm efficiency is high. My research builds a link between financial accounting information and managerial accounting information, and also provides new evidence to understand the managerial incentives behind each strategy chosen by managers. This third dissertation investigates how industry peer firms tend to influence the specific firm & rsquo;s voluntary disclosure strategy. Through examining the empirical example of management earnings forecast between 2005 and 2011 and implementing the 2SLS regressions, I find that the specific firm & rsquo;s disclosure frequency, disclosure horizon and the disclosure of bad news are significantly influenced by its peers firms & rsquo; disclosure behaviors. Specifically, the increase in the peers & rsquo; disclosure frequency, disclosure horizon and disclosure of bad news tend to encourage the specific firm to increase its disclosure frequency, disclosure horizon and disclosure of bad news. Moreover, certain firms (such as firms with S & P credit rating, higher profit, larger size or higher market-to-book ratio) tend to be more sensitive to their peer firms & rsquo; voluntary disclosure strategy. Finally, I find that the specific leader-follower relation doesn & rsquo;t exist in the peer effects of disclosure strategy and thus the signaling theory, litigation risk and CEO reputation are more major reasons than herding theory and free rider theory in explaining this phenomenon.
Author: Khondkar E. Karim
Publisher: Emerald Group Publishing
ISBN: 1804558001
Category : Business & Economics
Languages : en
Pages : 270
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Volume 26 of Advances in Accounting Behavioral Research compiles innovative and new explorations into the behavioral aspects of accounting and auditing including the effects of organizational commitment, the impact of stressors on performance, the effects of auditor familiarity and the examination of personality traits.
Author: Davide Scaltrito
Publisher:
ISBN:
Category :
Languages : en
Pages : 14
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The paper aims to assess the level of voluntary disclosure in companies listed on the Italian Stock Exchange and understand the relationship between the quality of voluntary disclosure and market value of Italian listed companies. Voluntary disclosure refers to the discretionary release of financial and non-financial information, which companies are not obliged to disclose by accounting standard setting bodies. In particular, this paper analyzes the effect that disclosure of voluntary information could have on the stock market value of Italian listed companies. To do this, 203 annual reports of Italian listed companies for the year 2012 were analyzed. A voluntary disclosure index index is created to measure the extent of disclosure. The index is used in an ordinary least squares model, as a dependent variable, to understand relationships between the above-mentioned determinants. The disclosure score is composed mainly of 38 items per firm.A total of 7,714 items were collected and analyzed.Results show the level of voluntary disclosure provided by Italian listed companies in their 2012 annual reports positively and significantly affect the value relevance of Italian listed companies.
Author: Andreas Zweifel
Publisher: GRIN Verlag
ISBN: 3668410623
Category : Business & Economics
Languages : en
Pages : 100
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Master's Thesis from the year 2012 in the subject Economics - Finance, grade: 5.5, University of Zurich (Department of Banking and Finance), course: Economics and Finance, language: English, abstract: Does voluntary disclosure quality pay off? And if so, what are the driving forces behind the relationship of voluntary disclosure quality and the cost of equity capital? This study addresses these and other questions in the context of analyzing the determinants of the cost of equity capital for Swiss firms. The relation between voluntary disclosure quality and cost of equity capital is widely known to be affected by self-selection. Potential endogeneity bias is controlled for by adopting a two-stage least squares approach in a cross-sectional setting. Voluntary disclosure quality is proxied by the annual reports disclosure scores for a well-diversified sample of Swiss firms as developed by the Department of Banking and Finance of the University of Zurich. Further, an ex-ante cost of capital metric derived from the dividend discount model is used in this study. Empirical evidence shows that the association between voluntary disclosure quality and cost of equity differs with a firm's stock listing history. While the relation is predicted to be negative for firms at the IPO stage, it is likely reversed at some point in a firm's stock listing history. These results suggest that analysts' information processing activities negatively moderate the impact of voluntary disclosure quality on firm value. Importantly, the predicted interaction between voluntary disclosure quality and stock listing history remains significant when adjusting for endogeneity.
