Share price reaction to financial and integrated reports

Willows, Gizelle D.; Rockey, Jessica A.

doi:10.1080/10291954.2018.1514141

Cited by 5 publications

(5 citation statements)

References 29 publications

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“…The information asymmetry problem causes investors to favor firms operating more transparently. Hence, managers disclose information voluntarily to attract investments and a favorable reputation from shareholders (Watts and Zimmerman, 1986). Therefore, IR can become a signal for shareholders, indicating its effort to meet their information expectancy by providing reliable corporate information (Fernando et al , 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

Stock market reactions to voluntary integrated reporting

Nakajima

Inaba

2021

JFRA

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Purpose This study aims to examine the impact of voluntary adoption of integrated reporting on the stock prices of firms in Japan. Design/methodology/approach The event study methodology was used to analyze the stock market reactions to voluntary integrated report (IR) publication. Abnormal returns were estimated for 1,602 observations of 490 firms publishing IRs in Japan using the market model. The t-test, the Boehmer et al., 1991 test and the generalized sign test examined the significance of the cumulative average abnormal returns (CAARs). Findings The study reveals that the stock market reacts positively to voluntary IR publication by firms, especially in 2019 and 2015. Additionally, it reveals a tendency for higher CAARs around IR publication dates than around corporate social responsibility report publication dates, especially in 2016 and 2015. Research limitations/implications The limitations of this study include the possibility of self-selection bias and omitted variable bias. Practical implications This study suggests that firms can earn higher abnormal returns in the stock market through environmental, social and governance (ESG) disclosure in IRs, corroborating the recently rising investor interest in voluntary integrated reporting in Japan. Originality/value This study contributes to the literature on the value relevance of voluntary adoption of integrated reporting by providing evidence of firms achieving significantly positive abnormal returns around voluntary IR publication dates. There is no published analysis on this topic using multitudes of sample firms using the event study methodology.

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Section: Literature Reviewmentioning

confidence: 99%

Stock market reactions to voluntary integrated reporting

Nakajima

Inaba

2021

JFRA

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“…Several prior studies have focused on EMH to analyze the effect of disclosure of various types of information on share prices. For example, Willows and Rockey (2018) document strong market reactions to the release of financial reports in the context of Johannesburg stock exchange. Syed and Bajwa (2018) demonstrate that the reaction of the stock return is statistically significant around the release of both good news and bad news, particularly around the announcement of earnings dates.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Fourth, the present study uses efficient market hypothesis (EMH), which is not very common in the FRQ literature in investigating the effect of information quality on SPM. Very few studies (Willows and Rockey, 2018; Syed and Bajwa, 2018) have focused on EMH in examining such influence and have considered only a partial disclosure of annual report. Finally, the study attempts to enrich the extant literature of FRQ by measuring them using an index that includes both financial and non-financial information disclosed in the annual reports even outside the audited financial statements.…”

Section: Introductionmentioning

confidence: 99%

Financial reporting quality and share price movement-evidence from listed companies in Bangladesh

Rashid

2020

JFRA

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Purpose The purpose of this study is to examine the effect of financial reporting quality (FRQ) on share price movement (SPM) of listed companies in an emerging and developing economy – Bangladesh. Design/methodology/approach The study analyzed 296 annual reports for the year 2015 and 2016 in examining the effect of FRQ on SPM. Ordinary least squares (OLS) regression model is used to examine the hypothesized relationship among the variables. A modified version of Lang et al. (2003) has been adopted in measuring the SPM. FRQ is measured using the qualitative characteristics approach as defined by the International Financial Reporting Standard Framework and used by Beest et al. (2009) and Braam and Beest (2013). Findings The study finds a positive association (though not significant statistically) between the FRQ and SPM in the country’s leading stock exchange (Dhaka stock exchange). Furthermore, the effect of enhancing quality on SPM is found to be stronger as compared to fundamental quality. Majority of the FRQ constructs demonstrate an improvement in the quality score in the year 2016 as compared to 2015 except for relevance. Research limitations/implications The key limitation of the study is that it focuses only on two years (2015 and 2016) annual reports data in measuring FRQ and its effect on SPM. Originality/value The study uses qualitative characteristics approach in measuring the FRQ and to examine its effect on SPM using the context of an emerging and developing economy – the case of Bangladesh.

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“…Barth et al (2017) found no evidence of a relationship between the quality of IR and the cost of capital. Furthermore, Willows and Rockey (2018) found evidence that financial disclosures generate statistically significant average abnormal returns in a way superior to those generated by IR.…”

Section: Previous Studiesmentioning

confidence: 99%

The relation between the adherence of integrated reporting to the IIRC framework and economic performance

Romão

Ribeiro²,

Neto³

2022

AMBIENTE

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Purpose: Analyzing the adherence of the Integrated Reports of a sample composed by three Brazilian companies to the IIRC (International Integrated Reporting Council) Framework. Also, understanding the quality contribution of these reports to the generation of economic performance for the adopting companies. Methodology: The companies were selected from the IIRC database. Using the method presented by Kiliç and Kuzey (2018) as a reference, a Disclosure Index model was adapted, through the content analysis technique, to measure the level of adherence of the Reports to the Framework. After calculating the Disclosure Index, the Coefficient of Variation of the companies' liquidity and solvency ratios and the macroeconomic performance of the researched period were analyzed, aiming to verify whether the Integrated Reports adhering to the Framework are associated with the economic performance of those companies. Results: The results indicate that it is not possible to state that the high levels of adherence to the Framework are associated with the economic performance of companies. The Coefficient of Variation calculation of the financial indexes during the publication period of the Integrated Reports does not present a better result when compared to the period prior to these publications. Contributions of the Study: Recent research on the topic of Integrated Reporting does not show a relationship between compliance with publications and the economic performance of Brazilian companies. Thus, this study proves to be relevant when researching the content of the Integrated Reports published by Brazilian companies and the relationship of this information with economic performance, verifying whether the Integrated Reports fulfill the promise of delivering economic benefits to the model's adopters.

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Share price reaction to financial and integrated reports

Cited by 5 publications

References 29 publications

Stock market reactions to voluntary integrated reporting

Stock market reactions to voluntary integrated reporting

Financial reporting quality and share price movement-evidence from listed companies in Bangladesh

The relation between the adherence of integrated reporting to the IIRC framework and economic performance

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