Sustainable Development and the European Union Policy on Non‐Financial Information: An Italian Empirical Analysis

Muserra, Anna Lucia; Papa, Marco; Grimaldi, Francesco

doi:10.1002/csr.1770

Cited by 44 publications

(52 citation statements)

References 41 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…This increase in reliability, trustworthiness, and objectivity may have increased investors' confidence in the information flow conveyed by companies, even strengthening the role of agency theory. While some studies have shown that previous regulations have not produced a satisfactory degree of NFI transparency, at both the national (Larrinaga, Carrasco, Coreea, Llena, & Moneva, 2002) and European levels (Costa & Agostini, 2016; Mio & Venturelli, 2013), we believe that the EU Directive may be a real change agent leading to increased transparency and accountability (Leopizzi, Iazzi, Venturelli, & Principale, 2019; Muserra, Papa, & Grimaldi, 2019; Sierra‐Garcia, Garcia‐Benau, & Bollas‐Araya, 2018). Therefore, we expected the EU Directive not to change the premises of agency theory, and we proposed the following hypothesis:Hypothesis After the implementation of the EU Directive, agency theory should remain able to predict companies ' decision to disclose NFI .…”

Section: Background and Development Of The Hypothesesmentioning

confidence: 85%

The predictive ability of legitimacy and agency theory after the implementation of the EU directive on non‐financial information

Mio

Fasan

Marcon

et al. 2020

Corp Soc Responsibility Env

View full text Add to dashboard Cite

Directive 2014/95/EU (the EU Directive) requires large companies to disclose information on the way they operate and manage social and environmental challenges, thus shifting the disclosure of non-financial information (NFI) from the voluntary to the mandatory realm. Building on the idea that regulatory changes can shape stakeholder expectations, we hypothesized that legitimacy (agency) theory's ability to predict NFI disclosure after the implementation of the EU Directive, and hence after NFI disclosure became mandatory, would decrease (increase). By relying on a handcollected data set measuring NFI disclosure, we have found that legitimacy theory maintains its predictive ability in the new mandatory setting, while agency theory's predictive ability partially increases.

show abstract

Section: Background and Development Of The Hypothesesmentioning

confidence: 85%

The predictive ability of legitimacy and agency theory after the implementation of the EU directive on non‐financial information

Mio

Fasan

Marcon

et al. 2020

Corp Soc Responsibility Env

View full text Add to dashboard Cite

show abstract

“…In Italy, the EU Directed was implemented through Decree 254/2016 (hereafter, the Decree) adapting it to the context (Caputo, Leopizzi, & Pizzi, 2020;Doni, Bianchi Martini, Corvino, & Mazzoni, 2019;Mion & Loza Adaui, 2019;Muserra, Papa, & Grimaldi, 2019); The 2017 fiscal year was the first year of its application. In the same way as the EU Directive, Decree 254 does not specify how to report NFI, and by extension NF risks, but it does provide a way to relate NF risks (art 3, subsection 3) to the NF issues (art 3, subsection 1).…”

Section: From Voluntary To Mandatory Disclosure Of Nf Risks: the Eumentioning

confidence: 99%

Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive

2020

View full text Add to dashboard Cite

In October 2014, the European Union adopted Directive 2014/95/EU (hereafter, EU Directive), mandating companies of a certain size to draft and publish corporate nonfinancial information (NFI) regarding society and the environment. In this study, we examine the mandatory disclosure of nonfinancial (NF) risks by listed Italian companies, as required by the EU Directive, focusing on both the state‐of‐the‐art of such disclosure and its usefulness for investors. For this purpose, the study adopts a two‐staged research approach; in the first stage, we employed a manual meaning‐oriented content analysis to investigate the NF declarations (NFDs) of the listed Italian companies that were obliged to disclose NFI, returning a quality NF risks disclosure index. In the second stage, we used the value relevance methodology to investigate whether the disclosed NF risk information affects the levels of equity prices, through a modified Ohlson model. Our research is one of the first to investigate the value relevance of mandatory disclosures of NF risks following the implementation of the EU Directive, in the Italian context. The research was carried out in 2017, the first year of the directive's application for listed Italian companies. The main findings support a positive association between NF risk information disclosure levels and companies' market value. Moreover, they provide evidence of a significant mediating effect of NF risk on the relationship between financial risks and market value.

show abstract

“…254/2016, which transposed the EU Directive in the Italian law, introduced several specific elements in respect to other national regulations which transposed the EU Directive as well. In fact, the Italian Decree appears to be more stringent than the EU Directive, as it introduced a system of external controls; at the same time, it adopts a more flexible approach, because it allows a wide range of reporting NFI methods, even an autonomous one; lastly, the Italian law introduced the possibility for Small and Medium Entities (SMEs) to voluntarily adopt the disclosure of NFI [99].…”

Section: Theoretical Framework and Hypothesis Developmentmentioning

confidence: 99%

The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?

2020

View full text Add to dashboard Cite

With its Global Compact, the United Nations (UN) called companies to align strategies and operations with universal principles on human rights, labor, environment, and anti-corruption, while settling and pursuing the seventeen UN Sustainable Development Goals (SDGs). Achieving SDGs in business reporting is part of the lively debate in the literature about the ability of nonfinancial reporting in providing stakeholders with useful and value-relevant information about companies' behaviors. This paper intends to address this issue in the aftermath of the recent European Union EU policy (Directive 95/2014/EU) of mandating companies to disclose nonfinancial information (NFI) according to some of the SDGs matters. To this end, the Italian context was analyzed, and main findings provide some early evidence of the absence of association between NFI and financial/market performance. At the same time, the positive association between companies' Beta factor and size and NFI is supported. This implies that stakeholders still do not appreciate NFI reported according to the new rules and probably that more time is needed to assess the possible advantages of an improved regulation about NFI. However, results show that larger companies and/or companies with higher risk profiles (Beta) have already started to improve their NFI.

show abstract

Sustainable Development and the European Union Policy on Non‐Financial Information: An Italian Empirical Analysis

Cited by 44 publications

References 41 publications

The predictive ability of legitimacy and agency theory after the implementation of the EU directive on non‐financial information

The predictive ability of legitimacy and agency theory after the implementation of the EU directive on non‐financial information

Do investors value companies' mandatory nonfinancial risk disclosure? An empirical analysis of the Italian context after the EU Directive

The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?

Contact Info

Product

Resources

About