Firm-level Disclosures and the Relative Roles of Culture and Legal Origin

In this paper, I investigate the relative roles of legal origin and national culture in explaining firm‐level disclosure levels internationally. Using a significantly larger and more representative sample than prior research, I document, using univariate and multivariate analyses, that both legal origin and culture (as operationalized by Hofstede and Schwartz) are important in explaining firm disclosure. Neither legal origin nor culture dominates with respect to overall explanatory power for variations in disclosure levels. Consequently, it is premature to write off culture as an important factor in the financial reporting environment. Furthermore, I find that legal origin is an important conditioning variable for the role of culture. Finally, although legal origin is a key determinant of disclosure levels, I hypothesize and find that its importance decreases with the richness of a firm's information environment.     

The relationship between environmental information disclosure and firm valuation: the role of corporate governance

Hopwood argued that accounting has become associated with environmental concerns, and that environmental concerns will be further integrated into accounting practices in the near future. The McKinsey Company discovered that environmental information affects a firm’s value, and that investors in firms with good corporate governance in Asian countries are willing to pay a price premium of 20 % or greater. The increasing need for environmental protection and responsibility to the community on the part of firms have led to environmental protection becoming a critical focal concern of governments, public welfare associations, and the public. Effective implementation of corporate governance has been reported to enhance operating performance and increase firm value. This study applies the Ohlson valuation model to examine the value relevance of environmental information disclosure and corporate governance, and investigate their on firms in Taiwan. The results indicate relationships between total disclosure of environmental information, mandatory disclosure of environmental information, and voluntary disclosure of environmental information and firm value. Corporate governance is positively correlated with the valuation of total disclosure of environmental information and mandatory disclosure of environmental information.     

To Disclose or Not to Disclose? An Investigation of the Antecedents and Effects of Open Book Accounting

Open book accounting (OBA) is the regular disclosure of management accounting information beyond corporate borders. Prior contributions have mainly concentrated on identifying its antecedents in individual or small numbers of organizations with exploratory cases. My paper responds to the call to investigate OBA on a wider empirical basis and focuses simultaneously on the explanatory variables of OBA and its influence on both financial and non-financial performance. I thus also explore the mediating role of OBA in linking key antecedents and performance within a unified theoretical framework. I empirically test my model using survey data from a sample of European companies, which are then analyzed through structural equation modeling. My findings indicate that the extent of OBA use is explained by a firm’s willingness to work together with its counterparts in the long run, that is, a relational factor, and the presence of sophisticated cost accounting systems, that is, a technical prerequisite. My evidence also suggests a positive association between OBA and firm performance. Additionally, I find that OBA is a partial mediator that explains how a firm’s long-term commitment to its external partners and the sophistication of its cost accounting system may become associated with performance.     

Disclosure Policy in a Mixed Market

This paper investigates the optimal disclosure strategy for private information in a mixed duopoly market, where a state-owned enterprise (SOE) and a joint-stock company compete to supply products. I construct a model where the two firms compete in either quantity or price, and uncertainty is associated with either marginal cost or market demand. The model identifies the optimal disclosure strategies that constitute a perfect Bayesian equilibrium by type of competition and uncertainty. In Cournot competition, both firms disclose information under cost uncertainty, while only the SOE or neither firm discloses information under demand uncertainty. Alternatively, in Bertrand competition, only the joint-stock company discloses information under cost uncertainty or demand uncertainty. Recently, developed countries have required the same level of disclosure standards for SOEs as for ordinary joint-stock companies. The findings described in this paper warn that such mandatory disclosure by SOEs can trigger a reaction by joint-stock companies, putting the economy at risk of a reduction in welfare.     

Artificial Intelligence Measurement of Disclosure (AIMD)

Empirical research on voluntary disclosure lacks an appropriate measurement technique for quantifying the intensity of a firm's disclosure. In this paper, I introduce artificial intelligence measurement of disclosure (AIMD), a computerised technique for measuring disclosure using artificial intelligence, which derives disclosure proxies from English-language annual reports for 10 different information dimensions without human involvement. Criterion validity tests indicate that, controlling for a robust set of covariates and multiple statistical techniques, AIMD is negatively associated with information asymmetry as proxied by spreads and PIN. Furthermore, AIMD has construct validity when compared to the AIMR disclosure rating, Standard & Poor's Transparency and Disclosure Rating, several proprietary manual disclosure scorings and companies’ own assessment of their level of disclosure as indicated by a survey. I also demonstrate the applicability of AIMD as a cost-effective technique for measuring disclosure using a sample of 127,895 firm-year observations of companies regulated by the SEC.     

Disclosure quality,price efficiency,and expected returns

Using a composite disclosure quality measure, we examine the effect of disclosure quality on price delay and the effect of price delay determined by disclosure quality on expected returns in the Taiwan stock market. We find that higher disclosure quality can reduce stock price delay through more investor attention and higher stock liquidity after we control for accounting quality variables and consider the endogeneity issue. Furthermore, we show that disclosure quality reduces expected stock returns through the price efficiency channel associated with both investor attention and stock liquidity. Our results indicate that increasing a firm’s standardized information rating by one standard deviation can reduce its expected stock return by 0.63% annually. Taken together, our evidence suggests that regulatory activities enforced to improve public firms’ disclosure quality in the Taiwan stock market can make the stock market more efficient and therefore lower investors’ required return for stocks.     

Learning by a dominant firm

This paper is concerned with the optimal output decisions of a dominant firm in the presence of imperfect information about the rival's reactions. The model is multi-period with the profits in each period being independent of those in other periods. Consequently, if the rival's reaction parameter were known to the dominant firm, a myopic policy would be optimal, In the presence of imperfect information about the rival's unknown reaction parameter, the dominant firm acts in a Bayesian manner by updating its prior distribution based on the observations of the rival's outputs. Because of the multiplicative shape of the rival's reaction function, the Bayesian updating rule is a function of the dominant firm's decision variable, i.e. its output decisions. This creates a dependence of the future value of the dominant firm on the present output decision, and hence a myopic policy is not, in general, optimal. It is shown that through output experimentation the dominant firm will tend to overproduce and, consequently, will increase its expected discounted profits (market value).     

On the informed seller problem: optimal information disclosure

We consider a revenue-maximizing seller who, before proposing a mechanism to sell her object(s), observes a vector of signals correlated with buyers’ valuations. Each buyer knows only the signal that the seller observes about him, but not the signals she observes about other buyers. The seller first chooses how to disclose her information and then chooses a revenue-maximizing mechanism. We allow for very general disclosure policies, that can be random, public, private, or any mixture of these possibilities. Through the disclosure of information privately, the seller can create correlation in buyers’ private information, which then consist of valuations plus beliefs. For the standard independent private values model, we show that information revelation is irrelevant: irrespective of the disclosure policy an optimal mechanism for this informed seller generates expected revenue that is equal to her maximal revenue under full information disclosure. For more general allocation environments that allow also for interdependent, for common values, and for multiple items, disclosure policies may matter, and the best the seller can do is to disclose no information at all.     

A model for IPO pricing and contract choice decision

This paper attempts to reconcile the average underpricing phenomenon with the expected wealth maximizing behaviors of market participants. Under the usual informational asymmetry, the optimal offer price for best efforts IPOs is derived as a function of the uncertainty about market’s valuation, the expected return on proposed projects and the size of offerings relative to the firm’s market value. According to these firm-specific characteristics, best efforts IPOs can be underpriced, fairly priced, or overpriced. Employing the investment banker as an outside information producer, the basic pricing model is extended to provide empirical implication for underwriting contract choice decision as well as for the pricing. Consistent with the existing empirical evidences, the model predicts that the issuers with greater uncertainty about market’s valuation choose best efforts contract over firm commitment contract and that the dispersion of initial returns would be greater for best efforts IPOs than for firm commitment IPOs.     

试论我国证券信息动态披露制度的建立

信息披露制度是证券市场监管制度的基石。证券信息动态披露制度的建立,有其重要的现实意义,而由于证券信息动态披露制度具有强制性、单向性和程式性等法律特征,因此借鉴美国证券信息披露制度,建立我国证券信息动态披露制度既要完善企业法人治理结构,又要完善证券信息动态披露的监管体制,只有这样,才能推进我国多层次资本市场体系的最终建立。此外还要健全证券信息动态披露的有关法规制度和强化违反信息动态披露的责任追究制度。     

Dynamic agency with persistent observable shocks

This paper studies a continuous-time hidden-action model with persistent observable shocks. In this model, I develop a method to characterize the optimal contract with history-dependent effort exertion and shirking decisions. Temporal shirking is always optimal after some histories as long as a positive persistent shock is expected. As a result, my model gives rise to a mechanism through which the moral hazard problem amplifies macroeconomic fluctuations. I also show the pattern of the agent’s utility adjustments with respect to persistent shocks and its implications for compensation design.     

The Effects of Negative Incidents in Sustainability Reporting on Investors’ Judgments–an Experimental Study of Third‐party Versus Self‐disclosure in the Realm of Sustainable Development

This study examines how the disclosure of negative sustainability‐related incidents affects the investment‐related judgments of decision‐makers. Participants in a sequential 2 × 2 between‐subjects experiment first received a company's financial information before viewing additional sustainability information (by the company and by a non‐governmental organization (NGO); with and without negative disclosure). Results indicate that self‐reporting of negative incidents does not affect decision‐makers’ stock price estimates and investment decisions compared with judgments based on financial information only. However, third‐party disclosure of these incidents by a NGO has a negative affect on these investment‐related judgments. Furthermore, the magnitude of the NGO reporting effect depends on whether the company itself simultaneously reports these incidents. Thus, disclosing negative incidents in sustainability reporting could lose some of its apparent stigma. Instead of avoiding negative reporting altogether, managers might use it as a risk mitigation tool in their reporting strategy. The results also emphasize the power of the often‐mentioned ‘watchdog’ function of NGOs acting as stakeholder advocates. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

ERP环境下的企业会计信息系统内部控制问题研究

ERP的引入,提高了企业效率,但也带来诸如内部牵制措施无法执行,网络通讯技术本身存在的安全性等内部控制问题。本文从ERP在财务会计信息系统的作用出发,分析ERP对会计信息系统提出的新要求,并提出相应的完善措施。     

Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

Sustainability-related non-financial information is increasingly deemed value relevant. Against this background, two recent trends in non-financial reporting are frequently discussed: integrated reporting and assurance of sustainability information. Using an established framework of information acquisition, evaluation, and weighting, this experimental study investigated how the choice of reporting format interacts with the voluntary assurance of sustainability information. The results from a sample of professional investors underline the important role of assurance in the context of voluntary disclosure and illustrate the relevant interaction with the reporting format. Assurance of sustainability information positively affected professional investors’ evaluation of a firm’s sustainability performance, resulted in a higher weighting of this information, and led to higher investment-related judgments. However, this assurance effect was weaker in the case of integrated reporting compared to separate reporting. We attribute this effect to a cognitive bias in decision-making when assured financial performance and non-assured sustainability performance are presented in the same report.     

Do You See What I Mean? An Entrepreneurship Perspective on the Nature and Boundaries of the Firm

abstract In answering the questions ‘why does the firm exist?’ and ‘what determines its boundaries?’, established theories of the firm have focused on boundary choice in a context of relatively easily identified and evaluated alternatives. This paper starts by asking the kindred question ‘why does the firm come into existence?’, shifting attention to the circumstances and choices surrounding new firm formation and the exploitation of new and untried business ideas. It proceeds to delineate an entrepreneurship perspective on the nature and boundaries of the firm, where boundary decisions are driven by the difficulty of implementing new, subjective means–ends frameworks in sometimes very unreceptive markets. A set of propositions developing the concepts of cognitive incongruence and cognitive incompleteness suggests that activities are internalized when other market participants are unable to accept or understand the entrepreneur's subjectively perceived means–ends framework. In conclusion, the paper supports the development of theory that explains choice of modes of action based on subjective world views and the emerging notion of a distinctive entrepreneurship‐based theory of the firm.     

On the Virtues of Hiring Lemons

Recruiting high‐ability workers and implementing optimal efforts are among the key objectives of a firm's personnel policy. We show that, if the firm applies a tournament scheme—that is, a competitive career system—selection and incentive issues are strictly interrelated, thus leading to a fundamental conflict: if the firm is primarily interested in balanced worker competition, there will be a rationale for hiring low‐ability workers (‘lemons’). Copyright © 2012 John Wiley & Sons, Ltd.     

Investment decisions and managerial compensation design in the presence of product market rivalry

We consider an economy where firms operate in an imperfectly competitive industry and mutually affect each others’ investment opportunities. Each firm is assumed to face a mutually exclusive choice of investing in either a short‐ or a long‐term project. For example, firm i's commitment to a short‐term project cuts into firm j's market in the short‐term but frees‐up firm j's long‐term market, and vice versa. Our results show that, even in the absence of an owner–manager conflict, the owner anticipates the product market rivalry and optimally compensates their managers with short‐ as well as long‐term compensation. Although the optimal compensation design induces myopic investment decisions, it is shown to be in the owners’ best interest. Copyright © 1999 John Wiley & Sons, Ltd.     

Voluntary Disclosure in the Annual Reports of New Zealand Companies

New Zealand is currently experiencing a liberal and competitive economic environment which has led to a greater investment interest in corporate securities. Likewise, New Zealand firms are also developing strategies to attract investors, for example, through voluntary disclosure of information. Therefore, the level of information voluntarily disclosed by New Zealand companies is of interest to prospective investors. The purpose of this study is to examine empirically the relationship between five firm-specific characteristics and the general level of accounting information voluntarily disclosed by companies listed on New Zealand Stock Exchange (NZSE). In this study the a priori expectations are based on agency theory. The five firm-specific characteristics examined are: firm size, leverage, assets-in-place, type of auditor, and foreign listing status. The results obtained from cross-sectional regression show that firm size, foreign listing status and leverage are significantly related to the extent of voluntary disclosure. In contrast assets-in-place and type of auditor are not significant explanatory variables. A study of this type would be of particular relevance to accounting policy makers because, inter alia, it helps them in (a) understanding corporate disclosure behaviour, (b) explaining why firms adopt certain disclosure strategies, and (c) developing a coherent and acceptable set of mandatory disclosure requirements.     

Scale-free distribution as an economic invariant: a theoretical approach

The presence of power laws (scale-free distributions) in widely different economic and social phenomena is well established. Here we focus on three specific cases viz. wealth distribution, firm size distribution and the city size distribution. We present a common framework to explain the origin of this feature in such seemingly unrelated contexts. It is shown that the equilibrium configurations of some general economic mechanisms are consistent with a power law in general and Zipf’s law in particular, in size distribution and it is an attractor under some conditions.