Preparers' perceptions of corporate reporting and disclosures

Wong, Kar Shun

doi:10.1057/palgrave.jdg.2040014

Cited by 18 publications

(6 citation statements)

References 7 publications

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Section: Bright and Dark Side Of Disclosurementioning

confidence: 99%

“…The amount of information disclosed by companies in their annual reports is usually measured in the existing literature through the construction of a disclosure index. This requires identifying a set of relevant information, testing its presence in the disclosure tools identified, and assigning a score based on the amount of information provided (Botosan, 1997;Ho and Wong, 2003;Baumann and Nier, 2004;Perignon and Smith, 2010;Höring and Gründl, 2011;Elshandidy et al, 2013;Malafronte et al, 2016).Part of the literature focuses on specific items, such as risk disclosure practices, based on the consideration that investors need to understand the risks a company takes and desire information on the sustainability of value creation strategies (Cabedo and Tirado, 2004;Lajili and Zeghal, 2005;Linsley and Shrives, 2005;Starita and Malafronte, 2014). While it is important to implement risk management systems, it is equally important to communicate effectively on the risks faced and the plans to seize opportunities and minimize the risk of failure (Beretta and Bozzolan, 2004).…”

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The effectiveness of risk disclosure practices in the European insurance industry

Malafronte

Starita

Pereira

2018

RAF

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Purpose -This paper examines whether risk disclosure practices affect stock return volatility and company value in the European insurance industry.Design/methodology/approach -Using a self-constructed "Risk Disclosure Index for Insurers" (RDII) to measure the extent of information disclosed on risks and employing panel data regression on a sample of European insurers for 2005-2010, it tests: i) the relationship between RDII and stock return volatility; ii) whether this relationship is affected by financial crisis; iii) whether RDII affects insurance companies' embedded value.Findings -The main results indicate that higher RDII contributes to higher volatility, suggesting that "less is more" rather than "more is good". However, higher RDII leads to lower volatility when the insurer has a positive net income, thus "more is good when all is good" and "less is good when all is bad". Furthermore, the relationship between RDII and stock return volatility is not affected by financial crisis, raising concerns regarding the effectiveness of insurers' risk disclosure to reassure the market. Moreover, higher RDII is found to impact positively on embedded value, thus contributing towards higher firm value.Practical implications -The findings could drive insurers' choices on communication and transparency, alongside regulators' decisions about market discipline. They also suggest that risk disclosure could be used to strengthen market discipline and should be added to the other variables traditionally used in stock return volatility and firm value estimation models in the insurance industry.Originality/value -This paper offers new insights in the debate on the bright and dark sides of risk disclosure in the insurance industry and provides interesting implications for insurers and their stakeholders.Keywords Risk disclosure, Insurance companies, Financial crisis, Volatility, Embedded value JEL Codes G22, G14, G01 Paper type Research paper Page 1 of 24Review of Accounting and Finance 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 R e v i e w o f A c c o u n t i n g a n d F i n a n c e 2 IntroductionIn recent years, several factors, including the global financial crisis, firms' need for capital, and market pressure, have led to an increased need for transparency and communication in the financial system. New and updated regulations have stressed this point, too, by introducing disclosure requirements (i.e., Basel III, MiFID II, and Solvency II). From this point of view, it is fundamental to investigate the impact of disclosure, as its effects could influence companies' ex ante choices on when, how, and what to communicate, as well as policymakers' initiatives on market discipline. This has important implications for stakeholders and companies themselves, thus raising the need to further investigate this phenomenon by testing whether a chan...

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Section: Bright and Dark Side Of Disclosurementioning

confidence: 99%

mentioning

confidence: 99%

The effectiveness of risk disclosure practices in the European insurance industry

Malafronte

Starita

Pereira

2018

RAF

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“…The usefulness of the corporate annual report and views of users and preparers regarding those annual reports have been subject of number of previous surveys (e.g. Chandra, 1974;Lee and Tweedie, 1975;Most and Chang, 1979;McNally et al 1982;Wallace, 1988;Ho and Wong, 2003;Yaftian and Mirshekary, 2005;Aljifri et al 2011). However the majority of previous studies focused on developed and developing Asian countries and there are only a handful studies that have looked at Perceptions of users in the state of Kuwait, these have looked only on perceptions of users (Naser et al 2003).…”

Section: Introductionmentioning

confidence: 99%

Corporate reporting and disclosures in the emerging capital market of Kuwait: the perceptions of users and preparers

et al. 2018

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The objective of this paper is to investigate the perceptions of users and preparers regarding financial disclosure practices in annual reports of Kuwaiti listed firms. To measure participants' views, a questionnaire survey was distributed in Kuwait between October and December 2012, to preparers (financial managers) and users (financial analysts) within Kuwaiti listed companies. The study compares between the perceptions of financial managers and financial analysts regarding to disclosing information in corporate annual reports as well as the main obstacles facing the disclosure process and what the problems restricting the use of companies' annual reports. The study also seeks to investigate whether there is a perceived need for improving the usefulness of Kuwaiti companies' annual reports for decision-making. The results, based on 137 responses, indicate that accounting practices in Kuwaiti firms are firmly rooted in a decisionusefulness tradition with management and the board of directors viewed as the key audience for reporting information. Indeed, the annual reports of Kuwaiti listed companies are perceived as the most important sources of information. On the whole both users and preparers shared similar concerns regarding the volume of information contained within annual reports, however, their views differed in terms of identifying potential solutions. The results of the study are likely to have implications for decision makers, the academic community and accounting standard setters.

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“…They argue that companies need to develop a strategy for disclosure, upgrade the role of investor–staff relations and voluntarily report non‐financial information, which are keys to a better information flow. Similarly, writers of financial reports are more inclined to favour investor relation improvements and the development of more industry‐specific guidelines and voluntary disclosure (Ho and Wong 2003). Nevertheless, the studies by Previts, Bricker, Robinson and Young (1994) and Mavrinac and Siesfeld (1998) suggest that financial analysts use non‐financial information extensively in their evaluations of companies.…”

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confidence: 99%

Analysts’ Perceptions of Intellectual Capital Information

Sakakibara¹,

Hansson²,

Yosano³

et al. 2010

Australian Accounting Review

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This study is based on a survey of 324 financial analysts in Japan. The survey concerns analysts’ perceptions of intellectual capital (IC) information and its links to the evaluation of companies. The value relevance of and the access to IC‐related information reveals a large gap on many items. The analysis further shows that the lack of access to information hampers analysts’ use of IC in their evaluation of companies, particularly in their use of human capital measures. Attitudes towards more disclosure and standardisation are mainly driven by perceptions of what generates value in companies.

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Preparers' perceptions of corporate reporting and disclosures

Cited by 18 publications

References 7 publications

The effectiveness of risk disclosure practices in the European insurance industry

The effectiveness of risk disclosure practices in the European insurance industry

Corporate reporting and disclosures in the emerging capital market of Kuwait: the perceptions of users and preparers

Analysts’ Perceptions of Intellectual Capital Information

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