Informing or obfuscating stakeholders: Integrated reporting and the information environment

The global development of integrated reporting (IR) is underpinned by the recognition of increased complexity of businesses and stakeholder demands for information relating to financial performance, management, corporate governance, and sustainability being provided in a single, coherent document which facilitates stakeholder decision making. This paper examines the lexical properties of IR following the introduction of the International Integrated Reporting Council (IIRC) Framework. Using an international sample, we find that when adopted voluntarily, IR are lengthier, use more complex language, and contain more boilerplate statements. Our findings suggest that without regulation, firms may continue to produce long and difficult to understand reports in fear of being perceived as omitting “bad news.” This fear might be justified as we find loss of analyst following and greater analyst uncertainty when voluntarily adopted IR is concise. In the regulated setting of South Africa, however, we find IR has become more concise, and firms that produce longer and more complex documents suffer from a deterioration of their information environment. Our findings suggest that regulators and practitioners need to be cognizant of the potential for an increased volume in reporting to obfuscate the message rather than inform stakeholders.     

Does organisational capital influence environmental strategies? Evidence from environmental innovation

As a result of increasing consumer awareness and stakeholder demands about environmental management, firms face stricter challenges surrounding the impact of business operations on the environment. In this regards, environmental innovation is one of the important ways of acting in harmony with the environment. Thus, the purpose of this study is to examine the impact of organisational capital on environmental innovation measured as the process innovation and product innovation. Using environmental innovation data from ASSET4 for the US listed firms between 2002 and 2018, our empirical results reveal a significant positive association between organisational capital and both the process innovation and product innovation. Furthermore, the relationship is stronger in high-profitability and sensitive industries subsamples. These results are robust to additional control variables and endogeneity tests. This study, while endorsing the resource-based view (RBV), provides important implications for the top management teams that organisational capital could be an important channel through which managers can boost environmental innovation.     

Climate change mitigation: Carbon assurance and reporting integrity

Concern about climate change has increased the pressure on firms to be accountable for social impact and to report on environmental, social and governance (ESG) performance. Focusing on the view that sustainability-oriented firms are likely to consider wider stakeholder interests and pursue high financial reporting integrity, this paper examines the association between carbon assurance and earnings management. Using a sample of firms listed on the New York Stock Exchange, we find voluntary adoption of carbon assurance (level), carbon disclosure and gender diverse boards are negatively associated with earnings management. Additional tests using different components of carbon assurance (percent and verification) confirm our main results. Our results suggest that firms that voluntarily invest in carbon assurance, carbon disclosure and gender diverse boards are less likely to engage in earnings management and thus have higher reporting integrity. This aligns with the view that firms' ethical concerns translate into higher quality reporting.     

Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk

This paper documents trends in bank activity, consolidation, internationalization, and financial firm conglomeration with data on more than 100 countries, and explores the extent to which financial firm risk and systemic risk potential in banking are related to consolidation and conglomeration. The relationship between consolidation, conglomeration and financial risk is documented using financial data on the largest 500 financial firms worldwide and on large banks in about 90 countries. We find that (a) large conglomerate firms did not exhibit levels of risk‐taking lower than smaller and specialized firms in 1995, while they exhibited higher levels of risk‐taking in 2000; (b) highly concentrated banking systems exhibited levels of systemic risk potential higher than less concentrated systems during the 1993–2000 period, and this relationship has strengthened during the 1997–2000 period. We outline research directions aimed at explaining why bank consolidation and conglomeration may not necessarily yield either safer financial firms or more resilient banking systems.     

A note on pro-poor social expenditures

This study extended the concept of ‘pro-poor growth’ in terms of social expenditures that measure whether social expenditures are pro-poor or not pro-poor. Using the idea of pro-poor growth, this study examines as to what extent the poor benefited from the growth of social expenditures i.e., human development, rural development, safety nets and community services. The monotonicity axiom sets out a condition that the proportional reduction in poverty is a monotonically increasing function of the pro-poor growth. This study satisfies the monotonicity criterion relative with social expenditures and proposes a ‘poverty equivalent social expenditure rate’, which takes into account both the magnitude of social expenditures growth and how the benefits of these expenditures are distributed to the poors and the non-poors. This methodology is applied to Pakistan’s unit record household surveys during the periods of 1964–2011 (21 household surveys) and examines the interrelationship between social expenditures, inequality, and poverty. It is argued that the satisfaction of a monotonicity axiom is a key criterion for measuring pro-poor growth. The results found that the social expenditures in Pakistan are not intrinsically pro poor. Although it was strongly pro poor in the 1980s and pro poor in the 1990s, growth in the 1970s and 2000s was anti poor, if the poverty related social expenditures still remains anti-poor in the subsequent years as reflected in the years 2008–2011, there is a likelihood that these expenditures may not trickle down to the poor but instead to the non-poor. It is indicative that to achieve rapid poverty reduction, the poverty equivalent growth rate ought to be maximized rather than the actual growth rate of social expenditures in Pakistan.     

The association between training and organizational commitment among white‐collar workers in Malaysia

The exploration of the relationship between organizational commitment and training is still in its early stages. Although there have been several studies reported on training and organizational commitment in Western countries, very little has been done in respect of the local professionals in Malaysia. This research investigates the association between five training variables (availability of training, support for training, motivation to learn, training environment and perceived benefits of training), and various aspects of organizational commitment (affective commitment, normative commitment, continuance commitment and overall organizational commitment). The availability of training, support for training, motivation to learn, training environment, perceived benefits of training were all significantly correlated with affective commitment, normative commitment and overall organizational commitment. The training environment and perceived benefits were also significantly correlated with continuance commitment. However the availability of training, support for training and motivation to learn were not significantly correlated with continuance commitment. This suggests that despite other forms of commitment, Malaysian workers do not feel that they need to remain in an organization that has made available the training, given support for the training and were motivated to learn. Otherwise, results suggest that on the whole, training does seem to have an influence on organizational commitment. The practical implication of this is that managers, who are so desirous of enhancing organizational commitment among their subordinates, should pay more attention to training. Annual income was found to correlate positively with affective commitment and overall commitment. Age and tenure were not significant predictors of overall organizational commitment contradicting studies in the West. This demonstrated that Malaysians might have different attitudes towards organizational commitment. The older they are and the longer they stay within an organization do not imply that they will be committed towards their organization. This phenomenon can be attributed to the uncertain business environment in Malaysia.     

Organic versus cosmetic efforts of the quality of carbon reporting by top New Zealand firms. Does market reward or penalise?

This study explores the quality of carbon reporting (QCR) by New Zealand (NZ) firms and its changes over time. It also explores the impact of QCR on the market reputation of firms. Using a sample of 300 company-year observations between 2015 and 2020 from top listed firms of NZ, the study develops a 14-item QCR index. The study finds that the company-level QCR reporting by NZ firms overall is not praiseworthy, as firms need to improve QCR in many aspects (both in-house efforts as well as external reporting). Although QCR has increased over time, firms' QCR efforts cannot be treated completely authentic. Majority of firms in NZ have disclosed unaudited carbon information to investors and other stakeholders. Additionally, our study finds that QCR positively affects the market reputations of firms, and the market behaves accordingly. Specifically, firms' organic carbon efforts are paid-off (through increased market reputation) by the market players and cosmetic/decoupled behaviour is penalised (through decreased market reputation). This study is the first on QCR reporting using a sample of NZ firms and an account of their initiatives towards the carbon emission reduction initiative and related disclosures. The study's findings have policy implications.     

The internationalization of an Arab bank: The case of Ahli United Bank of Bahrain

Ahli United Bank of Bahrain (AUB) has “leapfrogged” over early stages of internationalization by means of multiple rapid acquisitions of competitors. Use of this high‐cost, high‐risk strategy is well known among companies with the resources to invest in international expansion, but its application has not yet been studied in depth among companies based in the Middle East. This theory‐driven case study examines the growth record of AUB, its place in the regional banking industry in the Gulf, and its successful internationalization as an Arab bank. The article concludes with a detailed assessment of managerial and theoretical implications arising from the case study, and proposes further research to understand better the process of internationalization by companies expanding from a base in the Middle East. © 2011 Wiley Periodicals, Inc.