Retaining Mandatory Securities Disclosure: Why Issuer Choice Is Not Investor Empowerment

The paper summarizes various agency cost and market theories of insider trading propounded over the course of the perennial law and economics debate over insider trading. The paper then suggests three testable hypotheses regarding the relationship between insider trading laws and several measures of financial performance. Using international data and alternative regression specifications, the paper finds that more stringent insider trading laws and enforcement are generally associated with greater ownership dispersion, greater stock price accuracy and greater stock market liquidity. This set of findings provides empirical support to theoretical arguments in favor of more stringent insider trading legislation and enforcement.

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confidence: 99%

“…shareholders' incentives to monitor and hence increase corporate insiders' ability and incentives to expropriate outside investors (Fox, 1999;Maug, 1998).…”

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confidence: 99%

A Comparative Empirical Investigation of Agency and Market Theories of Insider Trading

Beny

2004

“…Finally, some studies relate disclosure with accurate pricing, which in turn is thought to reduce the cost of capital. Improved stock price accuracy is considered beneficial if it results in an improvement in the allocation of capital or reduces the agency costs associated with the divergence of interests between controlling shareholders and minority shareholders or between managers and dispersed shareholders (Fox 1999;Ferrell, 2007).…”

Section: Volatility Of Stockmentioning

confidence: 99%

“…There is some empirical evidence suggesting that share price accuracy can affect the allocation of capital and agency costs (Fox 1999). Empirical research has proxied accurate pricing in various ways, including volatility of stock (Healy and Palepu, 2001).…”

Section: Volatility Of Stockmentioning

confidence: 99%

Voluntary Disclosure of Corporate Strategy: Determinants and Outcomes - An Empirical Study into the Risks and Payoffs of Communicating Corporate Strategy

Coebergh

2011

VOLUNTARY DISCLOSURE OF CORPORATE STRATEGY: DETERMINANTS AND OUTCOMESKeywords: Voluntary disclosure, corporate strategy.Business leaders increasingly face pressure from stakeholders to be transparent. There appears however little consensus on the risks and payoffs of disclosing vital information such as corporate strategy. To fill this gap, this study analyzes firm-specific determinants and organisational outcomes of voluntary disclosure of corporate strategy. Stakeholder theory and agency theory help to understand whether companies serve their interest to engage with stakeholders and overcome information asymmetries. I connect these theories and propose a comprehensive approach to measure voluntary disclosure of corporate strategy. Hypotheses from the theoretical framework are empirically tested through panel regression of data on identified determinants and outcomes and of disclosed strategy through annual reports, corporate social responsibility reports, corporate websites and corporate press releases by the 70 largest publicly listed companies in the Netherlands from 2003 These questions triggered the writing of this dissertation, being a professional consultant and public relations executive, trying to understand the dynamics of communicating corporate strategy. Or as the topic is formulated in management research terminology:exploring determinants and organisational outcomes of voluntary disclosure of corporate strategy. 8 Research objective and methodologyBased on the identified gap in business practice and academic research, this section formulates the research objective, research questions and methodology of my research. A justification on the methodology is provided, followed by the pursued usefulness of this research for research and business practice. Research objective and research questionsTo fill the gap in business practice and in academic research on voluntary disclosure of corporate strategy, the research objective of this thesis is formulated as follows: To develop understanding and provide empirical evidence that help leaders of publicly listed companies understand how voluntary disclosure of corporate strategy contributes to corporate success.This research objective drives the following research questions:1. What are determinants of voluntary disclosure of corporate strategy?2. What are outcomes of voluntary disclosure of corporate strategy? MethodologyAs no earlier comprehensive research is known on voluntary disclosure of corporate strategy, literature research is conducted to construct a (preliminary) theoretical framework to identify and formulate the determinants and outcomes of voluntary disclosure of corporate strategy. The hypotheses that are based on these determinants and 9 outcomes are tested in a large-scale quantitative study, based on secondary data, available in the public field. The data are longitudinal, spanning a period of six years.The research questions are answered using the following process:• A theoretical framework is constructed to explain volu...

“…56 The desirability of mandatory disclosure provisions has provoked a great variety of publications. October 1999October , 1335October -1419October (1999. The following section models explicitly the effects that result from the fact that private costs of disclosure exceed the social costs.…”

Section: Legislative Intervention -Mandatory Disclosurementioning

confidence: 99%

Global Differences in Corporate Governance Systems - Theory and Implications for Reforms

Berndt

2001

Agreements on reforms of corporate governance, corporate law, and securities regulations, in order to augment the functioning of emerging equity markets, are complicated due to the fact that two different financial systems with some opposing features have evolved in the advanced economies, namely the insider system and the outsider system. The persistence of these systems are sought to be explained by introducing interactions between corporate governance, regulatory intervention, and capital markets into a model of evolutionary game theory. Resulting network effects are identified and analyzed. One major conclusion of the analysis is that, in the long run, reforms should be headed towards features of the outsider system because it operates better in integrated capital markets. However, attempts to achieve immediate transition into that direction can have detrimental effects, if the legal environment is not supportive enough for arm's-length financing.