Corporate Disclosure Practices, Institutional Investors, and Stock Return Volatility

Bushee, Brian J.; Noe, Christopher F.

doi:10.2307/2672914

Cited by 1,262 publications

(781 citation statements)

References 15 publications

(35 reference statements)

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“…In addition, Bushee and Noe (2000) found that institutional investors are more attracted by more informative firms. In our study, we explore the converse association.…”

Section: Literature Review and Research Questionsmentioning

confidence: 98%

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

2016

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This paper explores the necessary and sufficient conditions of good Corporate Governance practices for high risk disclosure by firms in their Corporate Governance Annual Report. Additionally, we explore whether those recipes have changed during the financial crisis. With a sample of 271 Spanish listed companies, we applied fuzzy-set qualitative comparative analysis to a database of financial and non-financial data. We report that Board of Directors independence, size, level of activity and gender diversity, CEO duality, Audit Committee independence, being audited by the Big Four auditing firms and the presence of institutional investors are associated with high risk disclosure. The conditions included in almost every combination are the presence of institutional investors and being audited by the Big Four. We found similar combinations for 2006 and 2012, while the analysis for 2009 showed the lowest number of causal configurations.KEYWORDS | Board composition, corporate governance, fuzzy-set qualitative comparative analysis, independent director, risk disclosure. RESUMO O presente artigo investiga as condições necessárias e suficientes das boas práticas de Governança RAE-Revista de Administração de Empresas | FGV/EAESP

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“…In addition, Bushee and Noe (2000) found that institutional investors are more attracted by more informative firms. In our study, we explore the converse association.…”

Section: Literature Review and Research Questionsmentioning

confidence: 98%

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

2016

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“…Bushee & Noe [3] conclude that in the US market, better disclosure gives good signal to the market, removing the uncertainty caused by the non-liberation of information. Consequently, it results in a reduction of prices volatility.…”

Section: Previous Literature and Hypotheses Developmentmentioning

confidence: 99%

“…If companies convey information to the market frequently, the impact of new information about its performance will decrease, causing a lower variation on prices. As disclosure increases, the company's risk decreases, causing a smooth in the stock price volatility [3,[16][17][18].…”

Section: Previous Literature and Hypotheses Developmentmentioning

confidence: 99%

“…First, is the effect on stock volatility arising from the role of accounting information disclosure in mitigating uncertainty? Accounting disclosures may reduce the magnitude of the impact of news about a firm's performance, which would reduce stock price volatility [2,3]. Second, retrospectively, the market microstructure theory also suggest that by increasing the amount of public information, disclosure is likely to reduce information asymmetries in the market value that result in pronounced price changes in response to changes in demand for the stock [4].…”

Section: Introductionmentioning

confidence: 99%

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Stock Volatility Consequences when Using the Equity Method in Parent Company

Schøler¹

2016

J Account Mark

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This paper contributes to the recent literature on the information transparency and its impact on stock price volatility. Some authors claim that more disclosure might reduce volatility of the stock price. Since 2005 the use of IFRS is mandatory for listed companies in the EU. In some countries, like Demark, corporate law allows the use of the Equity Method in separate financial statements to measure investments in subsidiaries, which is contrary to IFRS. Lately, IFRS has re-allowed the use of the Equity Method (probably to be approved by the EU soon). This study investigates the stock volatility consequences of using the Equity Method so far in Denmark. We had collected all Danish non-financial and non-insurance companies disclosing consolidated Group and Parent company financial statements. Also, we selected volatility measures by use of the ORBIS-database, and analyses it all together. Our tests showed lower level of volatility for the Equity Method using group of companies compared to the non-Equity method using group of companies, also after controlling for differences in industries and transparency levels in the two groups' companies. Regression analyses confirmed the tendency that Equity Method and lower volatility follows each other. However, we did not find evidence that the specific account "Reserve for net Revaluations

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“…The AICPA's special committee on financial reporting (American Institute of Certified Public Accountants (AICPA), 1994) found that the benefit of greater disclosure is a lower cost of equity. Bushee and Noe (2000) focused on the cross-sectional relationship between risk and disclosure. Several of the relevant theories related to risk disclosure are also stated below: …”

Section: Background and Related Literaturementioning

confidence: 99%

Bank Disclosures and their Impact on Credit Risk: Evidence from Bangladesh

Zheng

Sarker

Nahar

2017

Asian Economic and Financial Review

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Article History JEL ClassificationC12; C23; G21; G32.The only way to ensure a well-informed response to bank risks is by ensuring transparent disclosures that flourish with potential synergy. This study investigates the impact of bank disclosures on credit risk where panel data are used. PCSE and FGLS regression models are applied to a sample of 32 commercial banks in Bangladesh from 2010 to 2014. The results reveal that bank disclosures index, non-sponsor ownership and advances to total assets are inversely associated with bank risk, whereas government ownership, capital adequacy ratio and tier 1 capital have a positive effect. The study's findings have a twofold implication for the national economy. First, the higher number of disclosures portrays a transparent image in users' minds that decreases stock volatility and the cost of capital. Second, policy makers should rethink government ownership with respect to the absorption of serious risk. Therefore, it is highly recommended either to denationalize or to reduce government ownership. Contribution/ Originality:This study is one of very few studies which have investigated the relationship between bank disclosures and credit risk in the developing country context. It found that bank credit policies are tremendously affected by the government ownership. Thus, this paper will contribute to the research related to credit risk management.

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Corporate Disclosure Practices, Institutional Investors, and Stock Return Volatility

Cited by 1,262 publications

References 15 publications

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

Risk Disclosure Analysis in the Corporate Governance Annual Report Using Fuzzy-Set Qualitative Comparative Analysis

Stock Volatility Consequences when Using the Equity Method in Parent Company

Bank Disclosures and their Impact on Credit Risk: Evidence from Bangladesh

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