The impact of New Zealand's disclosure reform on differential managerial disclosure behaviour for good news versus bad news firms

Marsden, Alastair; Poskitt, Russell; Wang, Yinjian

doi:10.1108/01140581111185490

Cited by 4 publications

(4 citation statements)

References 41 publications

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“…These comments appear to imply that stakeholders' attitudes and responses to the type of information released can shape voluntary disclosure practices by familycontrolled companies. This finding is consistent with that of Marsden et al (2011), who argue that stakeholders' reactions, particularly those of investors, play an important role in the amount and type of information disclosed (see also Mistry et al 2014). This shows that external factors, such as stakeholders and the business environment, influence the extent to which companies disclose information.…”

Section: Although It [Voluntary Disclosure] Creates An Opportunity Fo...supporting

confidence: 89%

Impact of ownership structure on the level of voluntary disclosure: a study of listed family-controlled companies in Malaysia

et al. 2019

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This paper investigates the level of voluntary disclosure in the annual reports of listed companies in Malaysia by examining the impact of ownership structure. A mixed methods approach was adopted to analyse the content and level of information disclosed voluntarily in companies' annual reports. Familycontrolled companies tend to voluntarily disclose information in relation to external factors and global conditions. Most family-controlled companies provide financial warnings in their disclosures. Studies that examine a voluntary disclosure practice by family-controlled companies in Malaysia are limited. As such, little is known about the effect of ownership structure on the level of voluntary disclosure.

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Section: Although It [Voluntary Disclosure] Creates An Opportunity Fo...supporting

confidence: 89%

Impact of ownership structure on the level of voluntary disclosure: a study of listed family-controlled companies in Malaysia

et al. 2019

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“…Skinner (1994) and Cotter et al (2011) found that managers disclose negative information to avoid stakeholder litigation, reputation costs for failure to disclose and to maintain the firms’ equity value. Alternatively, managers may choose to disclose more positive information, to signal “good news” to the market (Linsley and Shrives, 2006; Zhang et al , 2013), their effectiveness in identifying, measuring and managing risk (Elshandidy et al , 2013) and to reduce the possibility of stock undervaluation (Weisbach, 1988; Marsden et al , 2011). Therefore, both “positive” and “negative” disclosures would indicate a higher quality of RMD than “no-direction”.…”

Section: Risk Management Disclosures Frameworkmentioning

confidence: 99%

A finer-grained approach to assessing the “quality” (“quantity” and “richness”) of risk management disclosures

Jia

Munro

Buckby

2016

MAJ

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Purpose-Utilising a finer-grained approach, this paper examines the 'quality' of narrative risk management disclosures (RMD) from a 'quantity' and 'richness' (width and depth) perspective. Evidence is then provided on the relationships between RMD quality and the corporate determinants driving that quality. Design/methodology/approach-Within a multidimensional quality disclosure framework, annual report narrative RMD from the top 100 Australian Securities Exchange (ASX) listed companies precisely 'matched' for the 2010 and 2012 years were examined using semantic content analysis. The relationship between the dimensions and sub-dimensions of RMD 'quantity' and 'richness', and various corporate characteristics were explored using ordinary least squares (OLS) regression analysis. Findings-The results indicate that RMD are considerably lacking in quality, from the 'quantity', 'width' and particularly the 'depth' dimension and sub-dimensions for both years. Many companies provide 'boiler plate' RMD over consecutive years and many do not comply with the intent of the ASX Corporate Governance Principles and Recommendations (CGPR) under the 'if not, why not' regime (ASX CGC 2010). Company size and cross listing were found to be the primary determinants of higher quality RMD and to a lesser extent firm risk. Some evidence was found that 'quality' RMD were less likely where companies are more highly leveraged and when their shareholders are more concentrated. Research limitations/implications-Although two coders independently coded the RMD and specific decision rules were followed, the subjectivity inherent in conducting semantic content analysis into the dimensions and sub-dimensions of the framework cannot be completely eliminated. However, by adopting a finer-grained approach this study contributes to the global literature on the quality of RMD. Previous studies are extended by analysing and testing the individual dimensions and sub-dimensions of 'quantity' and 'richness' which provides new empirical evidence and a more comprehensive portrayal of RMD quality and a greater understanding why some companies are more likely to disclose higher quality RMD than others. Practical implications-These results provide useful and predominantly new empirical evidence on the quality of RMD for practitioners, regulators and researchers. As many companies are not complying with the 'intent' of the 'if not, why not' approach, these results support the argument for mandated narrative RMD regulations at an international level. Originality/value-The multidimensional framework of RMD 'quantity' and 'richness' provides a bases for examining not only how much is disclosed, but what is disclosed and how. In adopting a finer-grained approach, this study analyses and tests the individual dimensions and sub-dimensions of the framework. This provides a deeper understanding of the overall quality of RMD and the determinants driving RMD quality for the sample companies.

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“…Song and Tuoriniemi (2015) demonstrate that banks provide more favorable loan contracting terms to firms with superior accounting quality. Marsden et al, (2011) show that New Zealand's disclosure reform has reduced information asymmetry problems. Russell (2015) presents evidence that continuous firm disclosure positively affects stock price adjustment to information.…”

Section: Hypothesismentioning

confidence: 98%

Bank accounting disclosure, information content in stock prices, and stock crash risk

Song

Jia

2016

PAR

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Purpose This paper aims to examine how banks’ accounting disclosure policies affect information content in stock prices and stock crash risk. Design/methodology/approach This paper uses 1996-2013 as the sample period. The final sample includes 10,045 observations in 37 countries. This paper uses stock return synchronicity to measure information content in stock prices. This study uses the frequency difference between extremely negative and positive stock returns to measure stock crash risk. To measure the level of bank accounting disclosure, this research follows Nier and Baumann (2006) to construct an aggregate disclosure index based on inclusions and omissions of a series of items in a bank’s annual accounting reports. Findings This paper finds that banks’ stocks have lower stock return synchronicity and fewer extremely negative returns if banks have higher levels of financial statement disclosure. These results suggest that banks’ stocks have higher information content and lower crash risk if banks’ information environment is more transparent. Originality/value Overall, this paper provides new insight about how to increase banks’ transparency and the safety of the banking industry, which is beneficial to economic growth. To increase banks’ transparency and reduce the possibility of extremely negative stock returns, one way to regulate banks is to increase their accounting disclosure. In addition, the extant literature (Chen et al., 2006, Durnev et al., 2003, 2004; Wurgler, 2000) demonstrates that firms with lower stock return synchronicity have more transparent information environments and higher investment efficiency. Thus, this paper finds that higher levels of bank accounting disclosure are associated with lower stock return synchronicity, which further reduces banks’ opacity and increases banks’ investment efficiency. Finally, compared to business firms, stock crash risk has much direr consequences because one bank’s stock crash will affect overall financial stability. Thus, it is important for authorities to know the effects of accounting disclosure on bank stock crash risk.

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The impact of New Zealand's disclosure reform on differential managerial disclosure behaviour for good news versus bad news firms

Cited by 4 publications

References 41 publications

Impact of ownership structure on the level of voluntary disclosure: a study of listed family-controlled companies in Malaysia

Impact of ownership structure on the level of voluntary disclosure: a study of listed family-controlled companies in Malaysia

A finer-grained approach to assessing the “quality” (“quantity” and “richness”) of risk management disclosures

Bank accounting disclosure, information content in stock prices, and stock crash risk

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