Disclosure quantity and the efficiency of price discovery

Chung, Dennis Y.; Hrazdil, Karel; Suwanyangyuan, Nattavut

doi:10.1108/raf-06-2015-0081

Cited by 10 publications

(6 citation statements)

References 41 publications

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“…However, a more recent study has found that the risk disclosure has been potentially utilised to improve the informativeness of the firms to meet the expectations of stakeholders by overcoming the limitations of annual reports (Guthrie et al, 2020). This finding is also supported by the notion that risk disclosure can reduce information asymmetry (Barakat & Hussainey, 2013;Moumen et al, 2015) and hence, bring positive impacts to the firm in the form of improvement of firm values/stock returns (Campbell et al, 2014;Chung et al, 2016;González et al, 2021;Li, 2008) or reduction in volatility (Edmonds et al, 2015;Hao & Dong, 2022;Kothari et al, 2009).…”

Section: Introductionmentioning

confidence: 75%

Achieving Operational Efficiency through Risk Disclosure

Sulistyawati¹,

Suryani²

2022

AJBA

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Manuscript type: Research paper Research aims: This study aims to investigate the effect of risk disclosure and CEO age on the operational efficiency. Design/Methodology/Approach: A quantitative study was undertaken on 130 manufacturing firms listed on the Indonesian Stock Exchange in 2019. Risk disclosure was evaluated through the content analysis, while operational efficiency was measured using the Data Envelopment Analysis (DEA) technique. The data was analysed by utilising weighted least square regression. Research findings: Results show that risk disclosure positively affects operational efficiency. The effect on CEO’s age however, is not substantial. These findings imply that a company becomes more efficient when it discloses more risk, while the CEO’s age has no bearing on the efficiency attained. Risk disclosure operates as a form of risk awareness that demonstrates management’s commitment to resolving the problems. Theoretical contribution/Originality: This study addresses the gap in the literature by empirically assessing how risk disclosure affect firms’ efficiency in developing countries. It also expands on previous literature by considering CEO age as determinant of the efficiency. The findings of the study support the stakeholder theory in which a company must consider its key stakeholders, especially those who encourage it to improve its efficiency, and hence, risk disclosure is required. Practitioner/Policy implications: This research suggests companies to disclose more to improve operational efficiency. It also recommends investors to invest in firms committed to risk disclosure. Research limitation/Implications: In this study, risk disclosure was measured by the number of risks disclosed in the annual report and did not consider other sources. Therefore, future studies should further explore risk disclosure in different media, such as the newspaper, corporate websites, and social medias. Additionally, this study was conducted based on one industry sector, and hence, future studies may incorporate broader range of industries to capture the impact of CEO characteristics. Keywords: CEO Age, Data Envelopment Analysis (DEA), Operational Efficiency, Risk Disclosure JEL Classification: M41

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Section: Introductionmentioning

confidence: 75%

Achieving Operational Efficiency through Risk Disclosure

Sulistyawati¹,

Suryani²

2022

AJBA

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“…Gender diversity may be referred to as the mix of males and females on the board of directors and the AC in specificity. Furthermore, Chung et al (2016) posit that female directors are very stable, calm and less aggressive in their decisions as compared to their male counterparts. This helps to enrich the discussions of the committee thereby improving its effectiveness.…”

Section: 22mentioning

confidence: 99%

Audit committee attributes, board of director’s independence and energy disclosure for environmental sustainability in Nigeria

Jibril,

Isa,

Maigoshi

et al. 2023

IJIS

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Purpose This study aims to examine how audit committee (AC) attributes influence quality and quantity disclosure of energy consumed by the listed nonfinancial firms for the period of five years (2016–2020). The study aims at providing empirical evidence on how board of director’s independence influences the relationship between AC attributes and firms’ energy in achieving sustainable development goals (SDGs) on world climate policy. Design/methodology/approach The study obtained data from a sample of 83 listed nonfinancial firms, content analysis technique was used to compute energy disclosure indexes using global reporting initiative standards, while regression analysis was conducted to test the relationship among research variables. Findings The study revealed that AC independence, diversity and meetings were significantly related with energy disclosure. Also, the study found that other variables were insignificantly related with energy disclosure. Research limitations/implications The study is constrained for not considering all listed firms in the country. Furthermore, the study considered selected attributes, other important audit-committee size attributes such as audit-committee size, audit-committee size tenure could be study in by the future study. Practical implications The study’s findings would have practical implications for corporations and other business organizations seeking to actively involve the energy-related SDGs 7 and 13 in their business models and successfully communicate these efforts to stakeholders. Originality/value To the best of author’s knowledge, this is the first study that provides empirical evidence on the effect of AC attributes on the energy disclosure using effect of board independence as moderator in Nigeria.

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“…These limitations have prompted serval studies, including ours, to use file size as a proxy for reading difficulty (e.g. Chung and Hrazdil, 2016;Kawada and Wang, 2019). Besides, readability formulas are representative measurement tools for measuring reading difficulty in English-speaking countries (Lou et al, 2018).…”

Section: Research Design and Measurement Of Variablesmentioning

confidence: 99%

Tone, readability and financial risk: the case of GCC banks

Hassan

Abu-Abbas

Kamel

2021

JAEE

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PurposeThe authors investigate the impact of disclosure tones and financial risk on the readability of annual reports in the banking sector. The authors also examine the moderating effect of banks' financial risk on the tone–readability relationship.Design/methodology/approachThis study relies on the agency theory and the social psychology theory to formulate its testable hypotheses and explain the empirical findings. It uses a sample of 390 bank-year observations from banks listed in the Gulf Cooperation Council (GCC) Stock Exchanges during the period 2014–2019. It also employs random effect regressions to analyze the data and to examine the reverse causality/endogeneity in order to obtain robust findings.FindingsThis study’s results demonstrate that easy (difficult) to read annual reports is significantly associated with positive (negative) tone. Bank managers characterized as “too positive/optimistic” and banks with higher financial risks publish less readable annual reports. The results also show that the interaction between negative tone and a bank's financial risk is inversely associated with reading difficulty, indicating that managers prepare easy text to clarify causes of their banks’ high risks, yet they communicate this easy text with a negative tone that reflects their feelings/emotions towards the financial risks of their banks.Practical implicationsThis study’s findings call for the use of a plain English text that bears a neutral tone and urge financial analysts to go beyond the financial aspects of annual reports. They also stimulate policymakers to draft policies, which ensure the presence of audit committee members who possess a broad expertise to uncover the linguistic issues embedded in the annual reports.Originality/valueTo the best of the authors' knowledge, this is the first study dedicated to exploring the tone–readability association in the GCC's banking sector.

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Disclosure quantity and the efficiency of price discovery

Cited by 10 publications

References 41 publications

Achieving Operational Efficiency through Risk Disclosure

Achieving Operational Efficiency through Risk Disclosure

Audit committee attributes, board of director’s independence and energy disclosure for environmental sustainability in Nigeria

Tone, readability and financial risk: the case of GCC banks

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