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Manuscript Type: EmpiricalResearch Question/Issue: Do firms take advantage of the flexibility of the "comply or explain" corporate governance disclosure regime to adopt governance practices that are best suited to their needs and value-added to the firms as predicted by economic theories of the firm? Using the Canadian "comply or explain" corporate governance disclosure regime, we construct a board score measure based on the Canadian code's 47 "best practices." We employ a unique approach by positing that the "explain" disclosures indicate higher agency costs of best practice adoption or indicate the ability of the firm to improve its governance practices relative to "best practices" in light of firm specific circumstances. Research Findings/Insights: We find that our measure is strongly and positively associated with higher firm value and weakly and positively associated with better operational performance. Further, our measure is more strongly associated with both than best practice adoption measures. Theoretical/Academic Implications: Our unique measure of governance quality reveals differences in governance efficiency and effectiveness that are consistent with the theorized advantages of "comply or explain" governance disclosure regimes. Further, our results suggest that firms in a "comply or explain" regime are not employing, on average, the discretion permitted by such a regime to avoid improvements to their corporate governance practices. Practitioner/Policy Implications: Our results support the proposition that the flexibility of a "comply or explain" governance regime provides tangible financial benefits to shareholders in terms of higher firm value and returns on shareholders' equity investment.

Purpose − This study examines the effect of managerial ability on the tone of earnings announcements and on the market response to the tone. Design/methodology/approach − This study constructs a model of the determinants of earnings announcement tone in order to examine whether managerial ability plays a significant role in determining earnings announcement tone. Further, to test whether the market response to the tone of earnings announcements is affected by managerial ability, this study also examines the interactive term between earnings announcement tone and managerial ability. The tone of earnings announcements is measured using the spread in the proportion of positive and negative words. Managerial ability is measured using the managerial ability rank developed by Demerjian et al. (2012). Findings − More able management teams use a more positive tone in their earnings announcements. Stock markets have more pronounced positive reactions to positive tones in the earnings announcements issued by companies with more able management teams. Originality/value-This study identifies managerial ability as a previously unrecognized determinant of tone in earnings announcements and of the stock price reaction to earnings announcements.

The emergence of social media as a corporate disclosure channel has caused significant changes in the production and dissemination of corporate information. This review identifies important themes in recent research on the impact of social media on the corporate information environment and provides suggestions for further explorations of this new but fast-growing area of research. Specifically, we first review the evolution of Internet-based corporate disclosure and related regulations, and then focus on three recent streams of research: 1) companies’ use of social media; 2) information produced by non-corporate users and its impact on capital markets; and 3) the credibility of corporate information on social media platforms.

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