Accounting Disclosure, Governance Standards and Innovation Activities in Emerging Markets

Chen, Zhenxiang; Li, Ming; Song, Liang; Xing, Yue; Zhang, Zhaoguo

doi:10.5296/ajfa.v6i2.6133

Cited by 5 publications

(6 citation statements)

References 19 publications

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“…Iatridis (2013) found that voluntary disclosure of environmental information can affect investors' perception, resulting in lower financing constraints than other enterprises. Moreover, Chen et al (2014) found that corporate information disclosure through we-media promoted innovation. And in areas where the government is less protective of investors, it is more conducive to innovation.…”

Section: Literature Review and Research Hypothesismentioning

confidence: 99%

Can we-media information disclosure drive listed companies' innovation?—From the perspective of financing constraints

Huang

Sun

Chu

2021

CFRI

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PurposeThe purpose of this paper is to investigate to what extent the amount, information source and the content of the microblog information disclosure of listed companies could impact on innovation from the perspective of financing constraints.Design/methodology/approachThe propensity score matching (PSM) and two-stage least square (2SLS) are used in estimations to deal with the endogeneity problem.FindingsEvidence shows that the amount of we-media information disclosure significantly drives the innovation of enterprises. The mechanism is that we-media information disclosure drives the innovation by easing the financing constraints and bringing funds to the R&D activities. Further research shows that only the original information can drive the innovation. In particular, the R&D information promotes the R&D input and innovation output more significantly.Practical implicationsThe conclusion of this paper provides a reference for the listed companies to drive innovation with the help of we-media information disclosure, a new solution for the small and medium-sized listed companies in China which have difficulty in carrying out innovation activities due to financing constrains and also provides useful practical enlightenment for the government and the capital market regulatory authorities to issue relevant policies to regulate we-media information disclosure.Originality/valueThis paper introduces a new information disclosure channel--we-media into the research on influencing factors of innovation and discusses the influence of the amount, different sources and disclosure contents from we-media on enterprise innovation, which enriches the existing research on enterprise innovation influencing factors, providing a new perspective for driving enterprises to innovate.

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Section: Literature Review and Research Hypothesismentioning

confidence: 99%

Can we-media information disclosure drive listed companies' innovation?—From the perspective of financing constraints

Huang

Sun

Chu

2021

CFRI

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“…Compared to developed countries, the information environment in emerging economies is less transparent because there is not yet enough analyst and media coverage (Chen et al, 2011(Chen et al, , 2014Francis et al, 2012Francis et al, , 2013Li et al, 2014). In addition, there is higher stock price synchronicity and stock crash risk in emerging economies (Francis et al, 2014;Hasan et al, 2014b;Morck et al, 2000;Jin and Myers, 2006).…”

Section: Research Hypothesesmentioning

confidence: 99%

“…Finally, the existing literature (Chen et al, 2011(Chen et al, , 2014Chen and Rezaee, 2012;Francis et al, 2012Francis et al, , 2013Hasan et al, 2014c;Li et al, 2014;Quttainah et al, 2013;Samaha et al, 2012;Song, 2014;Yu, 2011) demonstrates the effects of accounting disclosure, corporate governance and other information intermediaries on firms' investment behaviors and financing environments in emerging economies. This study advances this stream of literature by showing the effects of emerging market firms' accounting disclosure policies from the perspective of stock markets.…”

Section: Introductionmentioning

confidence: 98%

Accounting disclosure, stock price synchronicity and stock crash risk

Song

2015

International Journal of Accounting &Amp; Information Management

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Purpose -This study aims to examine the effects of firms' accounting disclosure policies on stock price synchronicity and stock crash risk, using a sample including 13 emerging markets. Furthermore, this research investigates how these relationships are affected by country-level investor protection and firm-level governance rankings. Design/methodology/approach -This paper uses accounting disclosure measures constructed based on survey questions by Credit Lyonnais Securities Asia (2001, CLSA). The accounting disclosure measure is used to explain the two dependent variables, stock price synchronicity and stock crash risk. The stock price synchronicity measure is defined as the logistic transformation of R 2 following Hutton et al. (2009) and Jin and Myers ( 2006). R 2 is taken from the estimation of an extended market model. The stock crash risk variable is measured as the frequency difference between extremely negative and positive stock return residues following Jin and Myers (2006). These stock return residues are taken from the estimation of an extended market model. Because the CLSA firm-level disclosure data are from 2000, this paper matches other data taken from the same year, for consistency. The final sample includes 204 observations in 13 emerging countries. Findings -This paper finds that firms' stocks are less synchronized with the entire market and have less crash risk if firms have superior accounting disclosure policies. These results suggest that the cost to collect firm-specific information may be decreased for investors if firms are more transparent. Thus, these firms' stocks have more firm-specific information content. These results also suggest that management is less likely to hide some negative information and release such negative information suddenly in the future if firms have higher levels of accounting disclosure. Thus, these firms' stocks are less likely to crash. In addition, the influences of firms' accounting disclosure policies on stock price synchronicity and crash risk are more significant for firms with superior country-level investor protection and firm-level governance rankings. These results imply that external investors place more value on accounting disclosure by well-governed firms because firms with superior governance standards are less likely to intentionally disclose misleading information. Thus, these firms' stocks can incorporate more firm-specific information and have less crash risk. Originality/value -The current study is the first to show that the effects of accounting disclosure on stock price synchronicity and crash risk are more pronounced for firms with superior country-level investor protection and firm-level governance standards. Thus, this research extends the literature by providing a comprehensive picture of the influences of accounting disclosure on stock markets. In addition, the existing literature (Chen et al., 2006;Durnev et al., 2004) shows that firms with lower stock JEL classification -M41, M48

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“…However, the effect borrowers' accounting quality has on bank loan syndicates in emerging economies is still an empirical question. On the one hand, the information environment in emerging markets is more opaque compared with that in developed countries because analyst and media coverage is less thorough (Chen et al, 2011(Chen et al, , 2014Francis et al, 2012Francis et al, , 2013Li et al, 2014). Thus, when forming a bank loan syndicate, lead banks need to retain more ownership and organize a more concentrated loan syndicate if borrowers have poor accounting quality.…”

Section: Literature Review and Hypothesis Development 21 Accounting Quality And Bank Loan Syndicatesmentioning

confidence: 99%

Accounting quality and financing arrangements in emerging economies

Song

2016

International Journal of Accounting and Information Management

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Purpose – This paper aims to investigate how borrowers’ accounting quality influences bank loan syndicates across 11 emerging markets. Furthermore, an investigation of whether the relationship between accounting quality and the bank loan syndicate structure is influenced by borrowers’ governance standards is conducted. Design/methodology/approach – To empirically test the research question, a sample including 11 emerging countries is constructed. Following Chen et al. (2011), an accounting quality measure is constructed by aggregating the three commonly used indicators developed by Kothari et al. (2005), McNichols and Stubben (2008) and Dechow and Dichev (2002). A univariate analysis and a multivariate analysis are conducted to investigate the relationship between accounting quality and bank loan syndicate structure after controlling for firm characteristics and other variables. Findings – The results of this research show that lead lenders need to retain more ownership and organize a more concentrated loan syndicate when borrowers have poor accounting quality because they must show their commitment to monitoring borrowers. In addition, lead lenders have fewer foreign lenders involved in a loan syndicate and these foreign lenders retain less loan ownership if borrowers’ accounting quality is poor because lead banks prefer local lenders who are more familiar with borrowers. Finally, the effects of accounting quality on bank loan syndicates are more significant for borrowers with superior governance because the credibility of accounting numbers generated by a well-governed borrower is better. Originality/value – The existing studies (Ball et al., 2008; Lee and Mullineaux, 2004; Sufi, 2007) have shown how information asymmetry and accounting quality affect loan syndicates in developed countries. This strand of literature is extended by the presentation of significant effects of accounting quality on financing arrangements, even in emerging economies with weak governance standards. This stream of literature is also extended by finding the interaction effects between accounting quality and governance standards on bank loan syndicates, a relationship which has not been examined by the existing literature (Ball et al., 2008).

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Accounting Disclosure, Governance Standards and Innovation Activities in Emerging Markets

Cited by 5 publications

References 19 publications

Can we-media information disclosure drive listed companies' innovation?—From the perspective of financing constraints

Can we-media information disclosure drive listed companies' innovation?—From the perspective of financing constraints

Accounting disclosure, stock price synchronicity and stock crash risk

Accounting quality and financing arrangements in emerging economies

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