Political/Policy Uncertainty, Corporate Disclosure, and Information Asymmetry*

Lei, Lijun; Luo, Yan

doi:10.1111/1911-3838.12317

Cited by 9 publications

(7 citation statements)

References 80 publications

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“…Mod (1) is for environmental scanning by dividing firms into 'inert' and 'alter' firms while Mod (2) is for another measure of uncertainty by applying coefficient for sales variation. There is significantly positive link between uncertainty and IA (information asymmetry) as supported by literature (Isniawati et al, 2018;Lei & Luo, 2023). For Mod(1) and Mod(2) mostly control variables are showing significant output.…”

Section: Discussion Of Estimationssupporting

confidence: 72%

Environmental Uncertainty and Information Asymmetry: Does Conservative Financial Reporting Moderates the Results

Fatima

2023

iRASD J. Eco.

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This research work examines the effect of uncertainty on information asymmetry moderated by conservative financial reporting Asymmetric information (spread), whereas uncertainty is calculated using a measure of the environmental scanning method. This method divides the sample into ‘inert’ and ‘alert’. ‘Inert’ firms are not scanning the environment, and ‘alert’ for firms who are constantly engaged in observing and scanning their environment while the coefficient of variation in sales is applied for robustness check of environmental uncertainty. A proxy developed by Khan and Watts is applied for accounting conservatism. The sample size of this research is taken from firms registered on the Pakistan Stock Exchange while the time period of study is 2010 to 2021. The statistical output reinforces the hypothesis of the study. The statistical results are evidence that conservative financial reporting may be helpful to reduce asymmetric information during uncertainty. Empirical estimations provide implications for all stakeholders e.g. investors, regulatory authorities, and researchers.

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Section: Discussion Of Estimationssupporting

confidence: 72%

Environmental Uncertainty and Information Asymmetry: Does Conservative Financial Reporting Moderates the Results

Fatima

2023

iRASD J. Eco.

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“…, 2022; Zhang and Zhang, 2022; Ali et al. , 2023; Lei and Luo, 2023). First, by providing transparency concerning political contributions, managers can assuage concerns about opportunistic behavior and bolster stakeholders' confidence in the firm.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Ali et al. , 2022; Lei and Luo, 2023). First, in contrast to various other corporate activities, corporate political spending is inherently controversial.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Lei and Luo (2023) stand as the sole study investigating the impact of EPU on political spending disclosure. Building upon prior research examining the connection between EPU and voluntary 8-K disclosure, this study posits that EPU influences firms' overall voluntary disclosure strategies, with political spending disclosure being one component.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Managerial ability, political risk and political spending disclosure

Zhang,

Wang

2024

MEDAR

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Purpose While the determinants of voluntary political spending disclosure have been extensively studied in the literature, there remains a lack of clear evidence regarding the specific impacts of managerial ability and political risk on such disclosure. Thus, the purpose of this study is to shed light on whether and how managerial ability and political risk influence firms’ political spending disclosure. Design/methodology/approach This study uses a sample of 2,242 firm-year observations of S&P 500 companies between 2013 and 2021. Findings This study finds that firms with high-ability managers generally disclose more information about political spending. This positive relationship between managerial ability and political spending disclosure holds even after conducting additional tests to address potential endogeneity concerns. Furthermore, this study finds that firms operating in high-risk political environments also exhibit a greater propensity to disclose information regarding their political spending. The results remain robust to alternative measures of managerial ability and political risk. Practical implications This study suggests that when designing policy to motivate firms to disclose political spending information, policy makers need to be aware of the critical role of managerial ability and idiosyncratic political risk the firm faces. In addition, this study offers insights to shareholders, advocacy groups, regulators and academics interested in understanding the determinants of political spending disclosure. Originality/value This study is among the first to provide empirical evidence that political spending disclosure can be explained by managerial ability and political risk. In addition, this study complements the literature on the consequences of managerial ability and political risk. Focusing on voluntary political spending disclosure, this study contributes to a deeper understanding of the factors shaping the overall corporate information environment.

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“…One of the major reasons for underpricing cited in the literature was information asymmetry (Baron 1982;Rock 1986). Political uncertainty prevailing in the market distorts the quality of information available regarding the firm (Lei and Luo 2023). Firms may either improve corporate disclosure to limit information asymmetry or may take advantage of this uncertainty by reducing the level of information available or manipulating the financial accounts through window dressing (Chen et al 2017).…”

Section: Political Electoral and Policy Uncertainty And Iposmentioning

confidence: 99%

Political Uncertainty and Initial Public Offerings: A Literature Review

Jhawar,

Seal

2023

IJFS

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The literature on the influence of political and policy-related uncertainties on financial aspects has gained an impetus in the last two decades. This study adds to the existing literature by reviewing the impact of political uncertainty on initial public offerings (IPOs). We aim to provide a holistic overview of the past research in this domain, identify the potential research gaps, and explore them further. We performed a bibliometric analysis using VOSviewer to identify the major keywords used, the most cited papers, the authors, and the major countries where research in this domain has taken place. Our perspective on the current state of the literature has been threefold. First, considering the importance of market timing in the firm’s decision to go public, it was seen that firms had shown an unwillingness to come up with an IPO during periods of high political uncertainty. Second, political uncertainty has shown its influence in all the phases of the IPO process; however, political connections and donations mitigate this effect. Third, the research in this domain is still at a very nascent stage and is mainly restricted to China and the US. Thus, we believe that there are several areas that are yet to be explored.

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Political/Policy Uncertainty, Corporate Disclosure, and Information Asymmetry*

Cited by 9 publications

References 80 publications

Environmental Uncertainty and Information Asymmetry: Does Conservative Financial Reporting Moderates the Results

Environmental Uncertainty and Information Asymmetry: Does Conservative Financial Reporting Moderates the Results

Managerial ability, political risk and political spending disclosure

Political Uncertainty and Initial Public Offerings: A Literature Review

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