Web disclosure and the market for charitable contributions

Nonprofit organizations face intense competition in the market for charitable contributions. Increasingly, donation decisions are made online, and organizations have responded by implementing substantive Internet disclosure and reporting regimes. We posit here that the voluntary disclosure of financial and performance information inherent in these regimes provides additional relevant information to a broad array of market participants, and thus has a positive impact on the receipt of charitable contributions. We test our hypotheses on a random sample of 400 US nonprofit organizations by building on the well established economic model of giving (Weisbrod and Dominguez, 1986), in which donations serve as the proxy for demand. Our central research question is thus: Are donors willing to “pay” for Web disclosure? Results indicate a positive relationship between the level of charitable contributions and the amount of disclosure provided by an organization on its website; however, performance and annual report disclosure are more important than financial disclosure, and performance disclosure has the biggest impact in organizations that are less reliant on donations.     

The Development of Legal Disclosure Requirements: the Case of Charitable Donations

The requirement that companies disclose the extent of their charitable contributions is an unusual feature of British company law. The purpose of this paper is to trace the development of the requirement from the opinion of the Jenkins Committee on company law reform, that no separate requirement be introduced, through to its appearance in the Companies Act 1967. Drawing on records of Parliamentary debates for the details of the views expressed and the arguments advanced, the paper demonstrates how a Labour Government's desire to have political donations revealed led to the introduction of mandatory disclosure of charitable contributions. The paper is thus a case study of the making of the law relating to financial disclosure.     

Using corporate social responsibility performance to evaluate financial disclosure credibility

Due to the paucity of immediate and direct information about financial disclosure credibility, it is often difficult for investors to assess the credibility of financial disclosures (e.g. whether reported earnings are biased). Given this situation, the present study proposes and finds that investors use additional cues, such as information about corporate social responsibility (CSR) performance, to form overall impressions about management's honesty, credibility, and trustworthiness. Similar to other findings in the halo effect literature, we find that these overall impressions subsequently influence both investors' assessments of financial disclosure credibility and the prices they are willing to pay for a company's stock. The findings support the theoretical framework on financial disclosure credibility by (1) showing that management credibility is an important tool that investors use to assess disclosure credibility and (2) suggesting that management credibility is a multidimensional latent construct for which CSR performance can be one of several relevant indicators.     

CAP Forum on E‐Business: The Management of Financial Disclosure on Corporate Websites: A Conceptual Model*

This paper addresses the impact of Internet financial reporting (IFR) on financial accounting theory by incorporating it into the general Gibbins, Richardson, and Waterhouse (GRW) (1990) disclosure‐management framework. The GRW model assumes that the firm has a relatively stable process of disclosure management. This process varies between two positions: one ritualistic and the other opportunistic. These dimensions can coexist in the same firm but, on average, the policy of a firm will be either more ritualistic or more opportunistic. Our survey of the financial information disclosed in traditional financial reporting (TFR) as compared with the website disclosures of a random sample of Canadian companies documents a significant difference between TFR and IFR, as well as a wide variability among the sample firms in their use of IFR content, format, and technology. We interpret this variability in the incremental difference of IFR over TFR as an indication that a firm's ritualistic or opportunistic behaviour under IFR is not different from its behaviour under TFR. Thus, the adapted GRW (1990) conceptual model appears to have the potential to support future research in the management of financial disclosure on corporate websites.     

FIRM RESOURCES,QUALITY SIGNALS AND THE DETERMINANTS OF CORPORATE ENVIRONMENTAL REPUTATION: SOME UK EVIDENCE

Using the example of the creation of corporate environmental reputation, the article offers a theoretical extension of the resource-based view of the firm to include quality signalling via the channel of accounting disclosure. The proposed framework is then tested via an empirical survey into the relationship between environmental disclosure and environmental reputation. The results suggest that implementation, monitoring and disclosure of environmental policies and their disclosure in annual reports contribute significantly to the creation of environmental reputation. Diverse institutional share ownership and low systematic risk are also associated with positive environmental reputation. Prior financial performance has no impact and there is no evidence that environmental reputation is created by a financial halo effect or by the availability of slack financial resources.     

The Disciplinary Role of Financial Statements: Evidence from Mergers and Acquisitions of Privately Held Targets

This study examines whether requiring the disclosure of audited financial statements disciplines managers’ mergers and acquisitions (M&As) decisions. When an M&A transaction meets certain disclosure thresholds, the Securities and Exchange Commission (SEC) requires the public acquirer to disclose the target's audited financial statements after the merger is completed. Using hand‐collected data, I find that the disclosure of private targets’ financial statements is associated with better acquisition decisions. Furthermore, I find that this disciplining effect of disclosure is more pronounced when monitoring by outside capital providers is more difficult and costly, and when other disciplining mechanisms are weaker. Finally, these findings are robust to several alternative explanations, such as monitoring from blockholders and voluntary disclosures. In sum, the evidence suggests that the ex post mandatory disclosure of private targets’ accounting information disciplines managers’ acquisition decisions and improves acquisition efficiency.     

A CONCEPTUAL FRAMEWORK FOR CORPORATE RISK DISCLOSURE EMERGING FROM THE AGENDA FOR CORPORATE GOVERNANCE REFORM

During the last decade an implicit conceptual framework for internal control and corporate risk management has arisen from risk management practice and policy within UK companies. An explicit conceptual framework for risk management is now emerging and is expressed in the Turnbull Report. In this paper, we develop a diagrammatic representation for the conceptual framework for internal control, risk management and risk disclosure. We consider the recent practical and policy developments in the disclosure of risk-related information in order to establish the current state of the art of corporate risk disclosure. Thus, we focus only on the disclosure aspect of the conceptual framework for internal control. We use a questionnaire survey to canvas the attitudes of UK institutional investors towards risk disclosure in relation to their portfolio investment decisions. Our empirical findings indicate that institutional investors do not generally favour a regulated environment for corporate risk disclosure or a general statement of business risk. The respondents agree that increased risk disclosure would help them in their portfolio investment decisions. However, for other aspects of the risk disclosure issue they are more neutral in attitude. Further, we found that the variation in the attitudes of institutional investors appears to be associated with the characteristics of the funds they manage as well as with their investment horizons. Further, we find that institutional investors’ perceptions of corporate governance are related to their investment horizons, among other factors.     

An Empirical Investigation of the Effect of CFO Power on Disclosure Quality

We examine the association between chief financial officer (CFO) power and disclosure quality, measured using financial statement disaggregation disclosure and analyst forecast disclosure. Empirically, we validate that CFO power, measured by multiple dimensions, is positively associated with firms’ disclosure quality. We also find that this positive association between CFO power and disclosure quality is stronger when firms exhibit higher governance monitoring and accounting quality. Further analysis shows that our main results hold across multiple disclosure quality tests. Our findings are robust to addressing endogeneity issues using two-stage least squares, Heckman selection bias, and propensity score matching analyses. The results highlight the importance of CFO power for the accounting reporting process and decision-making.     

The impact of corporate governance on Internet financial reporting

This study examines the association between corporate governance mechanisms and disclosure transparency measured by the level of Internet financial reporting (IFR) behavior. We measure corporate governance by shareholder rights, ownership structure, board composition, and audit committee characteristics. We develop a disclosure index to measure the extent of each sample firm’s IFR by presentation format, information content, and corporate governance disclosures. Results indicate that firms with weak shareholder rights, a lower percentage of blockholder ownership, a higher percentage of independent directors, a more diligent audit committee, and a higher percentage of audit committee members that are considered financial experts are more likely to engage in IFR. The findings suggest that corporate governance mechanisms influence a firm’s Internet disclosure behavior, presumably in response to the information asymmetry between management and investors and the resulting agency costs. Additional exploratory analysis indicates that the association between corporate governance and IFR varies with firm size. Our results suggest that new regulatory guidance in corporate governance leads to improved disclosure transparency via IFR.     

有效预警上市公司违规的递延所得税异动指标和人工智能模型

2000-2017年,3434家A股上市公司样本中的47.79%至少有一次违规记录,每年平均有17%的公司违规,而监管机构平均需要2.7年查证并通告违规行为。我们用当年数据构建递延所得税异动指标,可有效预判违规,并发现监管机构未能识别这一指标的警示作用,实际激励了违规公司通过操纵递延所得税提高财务指标以规避稽查。进一步构建决策树模型,对违规事件实现样本外精准判别。本文揭示了A股公司大面积违规而稽查过程冗长迟缓这一重要现象,并分析了违规机制,指出了所得税数据在稽查违规中可以发挥的预警作用,为监管者和投资者提供有效预警上市公司违规行为的新指标和方法。     

The effect of earnings management on firm performance: The moderating role of corporate governance quality

This paper investigates the relationship between earnings management and financial performance of firms in Anglophone sub-Saharan African Countries in a dynamic framework. The study shows how this relationship is moderated by aggregate disclosure and best-practice corporate governance quality metrics. The findings indicate that earnings management's performance effects persist even after controlling for dynamic endogeneity, simultaneity, and unobserved time-invariant heterogeneity inherent in the earnings management and performance relationship. Again, the results support the prediction of agency theory regarding the efficient monitoring effect of adherence to best-practice internal governance systems in constraining firms' earnings management practices and subsequently enhancing firms' performance. Moreover, the study's findings regarding the positive effect of earnings management on performance, which suggests efficiency motives behind earnings management practices in Africa, demonstrate that the African context is uniquely different from other emerging markets that report opportunistic motives. Concerning the moderating role, our study reveals that the positive effect of earnings management on the financial performance of firms tends to be stronger in the presence of corporate governance quality.     

有效预警上市公司违规的递延所得税异动指标和人工智能模型

2000-2017年,3434家A股上市公司样本中的47.79%至少有一次违规记录,每年平均有17%的公司违规,而监管机构平均需要2.7年查证并通告违规行为。我们用当年数据构建递延所得税异动指标,可有效预判违规,并发现监管机构未能识别这一指标的警示作用,实际激励了违规公司通过操纵递延所得税提高财务指标以规避稽查。进一步构建决策树模型,对违规事件实现样本外精准判别。本文揭示了A股公司大面积违规而稽查过程冗长迟缓这一重要现象,并分析了违规机制,指出了所得税数据在稽查违规中可以发挥的预警作用,为监管者和投资者提供有效预警上市公司违规行为的新指标和方法。     

Social and solidarity finance: A conceptual approach

An analysis of the social- and solidarity-finance system of relationships, which has characteristics that differ from those of other financial intermediaries, underpins the conceptual approach of this article. Social and solidarity finance constitutes a set of interdependent financial and social relationships, and partnerships between individuals and organisations, that mesh into an organised whole.This article makes use of institutional economics to understand those mechanisms of interaction between individuals, organisations and institutions that are not strictly economic. First, we offer a new conceptual framework on social and solidarity finance from an institutional point of view. Then, based on this framework, we outline the sustainability of alternative finance and its ability to respond to specific entrepreneurship needs. Finally, we present the French situation regarding social and solidarity finance to highlight the main characteristics of alternative finance.     

美国证券法对衍生交易市场风险披露的监管及借鉴——以SEC“305规则”体制的监管要求为视角

在以市场风险披露为基础的衍生交易监管政策下,SEC的“305规则”体制由定量、定性信息披露要求与前瞻性信息披露的安全港规则有机构成。我国应当借鉴先进的风险监管规则,构建创新的衍生工具市场风险披露法律框架,并解决好创新规则实施过程中的成本-收益权衡问题、收益波动性问题。     

Segmental Disclosure Practice: Thirteen Years On

In an age of financial disclosure directed by professional standards, the changes in practice voluntarily undertaken by companies are sometimes difficult to detect. By focusing on a period prior to the introduction of SSAP 25, the segmental disclosure issue offers an opportunity to consider whether practice has voluntarily changed. An examination of the extent and quality of segmental disclosure, for a specific group of companies over an extended period, offers an indication of the need for a standard or further regulation. If it can be demonstrated that disclosure practice has improved under a primarily self-regulatory framework, the need for a standard like SSAP 25 may be questioned. The segmental disclosure practices of the same group of seventy companies are compared for the reporting years 1975–6 and 1988–9. Whilst an underlying improvement in respect to business activity disclosure is revealed, the same cannot be claimed for geographic segmental disclosure. Not only has the number of companies reporting profit by geographic segment declined but also the consistency with other aspects of the annual report has reduced.     

THE LEVEL OF RESERVES IN FUND-RAISING CHARITIES

Sources of financial resources are considered as one possible classification scheme for non-business organisations. Under this scheme, fund-raising charities are distinguished by their dependence on donation and grant income. Donors are more willing to give for direct charitable service than for 'back-up' use such as administration and reserves. The level of reserves of the 50 largest fund-raising charities relative to their revenue expenditure is shown to have a wide dispersion, but with clustering of charities engaged in certain types of operations.     

A Real Effects Perspective to Accounting Measurement and Disclosure: Implications and Insights for Future Research

Accounting measurement and disclosure rules have a significant impact on the real decisions that firms make. In this essay, we provide an analytical framework to illustrate how such real effects arise. Using this framework, we examine three specific measurement issues that remain controversial: (1) How does the measurement of investments affect a firm's investment efficiency? (2) How does the measurement and disclosure of a firm's derivative transactions affect a firm's choice of intrinsic risk exposures, risk management strategy, and the incentive to speculate? (3) How could marking‐to‐market the asset portfolios of financial institutions generate procyclical real effects? We draw upon these real effects studies to generate sharper and novel insights that we believe are useful not only for the development of accounting standards, but also for guiding future empirical research.     

Economic consequences of key performance indicators' disclosure quality

Starting from 2006, UK listed companies are required to analyse their performance by using key performance indicators (KPIs) in specific sections of their annual reports and the UK Accounting Standard Board (ASB) provides companies with guidelines for the best practice regarding KPI disclosure. Motivated by the possible effects of the KPI disclosure quality, we examine their potential economic consequences for a sample of UK listed firms for the period 2006 to 2010. Our sample consists of 448 firm-year observations. We first develop a measure for the quality of the KPI disclosure based on the ASB's guidelines. We then test the economic consequences of financial and nonfinancial KPI disclosure quality both separately and combined into one variable. Our findings, after conducting various sensitivity tests, suggest that only the disclosure quality of financial KPIs matters. We find a significantly negative (weakly positive) relationship between disclosure quality of financial KPIs and the implied cost of capital (firm value). These results inform regulatory bodies as well as the academic literature about the potential economic consequences of this type of disclosure.     

Management earnings forecasts and the quality of analysts’ forecasts: The moderating effect of audit committees

This study investigates whether effective audit committees influence the association between management earnings forecasts and the properties of analysts’ forecasts. We posit that this influence on the part of an audit committee would likely result from increased responsibility for monitoring voluntary disclosure. Using the four attributes that the Blue Ribbon Committee (1999) and prior research suggest as being indicative of audit committee effectiveness, we find that analysts’ forecasts exhibit higher accuracy and lower dispersion with the issuance of management forecasts for those firms employing audit committees that are composed exclusively of independent directors, include an accounting expert, and act with due diligence. We also find that effective audit committees strengthen the association between management and analyst forecast accuracy. Our evidence, therefore, supports the notion that effective corporate governance influences the reliability of voluntary disclosure, and thereby benefits the users of financial information.     

Derivatives Markets and Systematic Risks: Some Reflections ∗ ‡

Derivatives are an essential part of risk management by all economic agents (financial or non financial). They contribute, with other financial innovations, to the allocative efficiency. Under certain circumstances they could also generate systemic risks. The purpose of this article is to underline the dramatic growth of derivatives instruments and the articulation between OTC and exchange-traded markets. The current debate about the regulatory framework applied to derivatives instruments and the implementation of internal control procedures (leading to more appropriate disclosure and reporting standards) is also discussed.