The Convergence of Disclosure and Governance Practices in the World’s Largest Firms*

Markarian, Garen; Parbonetti, Antonio; Previts, Gary John

doi:10.1111/j.1467-8683.2007.00561.x

Cited by 39 publications

(41 citation statements)

References 51 publications

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“…This result represents an important contribution to the more generic corporate disclosure literature (e.g. Marston & Shrives, 1991; Botosan, 1997;Giner Inchausti, 1997;Archambault & Archambault, 2003; Patel et al, 2003; Prencipe; Cheng & Courtenay, 2006;Markarian et al, 2007). The demand for information is an important driver for voluntary disclosure only in Anglo-American settings, while its importance in other institutional settings seems to be limited.…”

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confidence: 66%

“…This paper contributes to the academic disclosure literature (e.g., Marston & Shrives, 1991; Botosan, 1997;Giner Inchausti, 1997;Archambault & Archambault, 2003; Patel et al, 2003; Prencipe; Cheng & Courtenay, 2006;Markarian et al, 2007) by analysing a disclosure decision that reflects a potential conflict of interest between directors and outside shareholders. It extends the limited, but emerging, literature on directors' remuneration disclosure (Chizema, 2008;Liu & Taylor, 2008;Laksmana, 2008;Laksmana et al, 2012) This study also contributes to the voluntary disclosure literature related to firm-specific incentives (e.g., Botosan, 1997;Laksmana, 2008;Liu & Taylor, 2008).…”

Section: Discussionmentioning

confidence: 99%

“…Disclosure is thus one of the cornerstones for effective, market-based control mechanisms. Indeed, Markarian et al (2007) found that, although disclosure practices have been converging, there are still significant differences in disclosure characteristics across corporate systems. Moreover, firms in marketoriented systems have a higher level of disclosure.…”

Section: Voluntary Disclosure and Country-level Institutional Charactmentioning

confidence: 99%

“…The results of the individual classifications were compared by the third researcher, who identified misalignments. Discrepancies were re-analysed and resolved by discussion between the three researchers (e.g., Lee, 1999;Markarian et al, 2007).Following this procedure a final set of coding rules was defined. As two coders worked separately, a third researcher assessed the accuracy and consistency of their coding.…”

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confidence: 99%

“…By contrast, most of the extant literature focuses on the explanations for disclosure where shareholders' and directors' interests are not likely to be in conflict (e.g., Botosan, 1997;Archambault & Archambault, 2003; Patel et al, 2003; Prencipe, 2004;Markarian et al, 2007).…”

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confidence: 99%

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Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure

Melis

Gaia

Carta

2015

The British Accounting Review

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Abstract:Directors' remuneration is a key issue for both academics and policymakers. It has caused enormous controversy in recent years. This study uses a comprehensive index to analyse the disclosure of directors' remuneration in Italian and UK listed firms. It finds that the level of voluntary disclosure is significantly associated with firm-specific incentives, such as the demand for information from investors and the need for legitimacy. It finds that the level of voluntary disclosure is significantly higher in the UK than in Italy and that firm-specific incentives to disclose voluntary information differ according to the institutional setting in which a firm operates. In the UK, firm-specific incentives mostly come from the demand for information, estimated with the level of ownership diffusion, and the need for legitimacy generated by poor market performance and shareholders' dissent. In Italy, firm-specific incentives seem to be represented by the need for legitimacy generated by media coverage. This study also provides evidence that, in both countries, the information disclosed in corporate documents does not allow readers to obtain a comprehensive picture of directors' remuneration. Bonuses are poorly disclosed even though they are a key element of directors' remuneration. This finding is clearly important for policymakers at European and national level.Keywords: agency theory, directors' remuneration, disclosure, legitimacy theory. 2 IntroductionDirectors' remuneration aims to align the interests of directors with those of shareholders, thereby reducing agency problems (Jensen & Meckling, 1l976). However, directors' remuneration, of itself, could give rise to agency problems (Bebchuk et al., 2002). This is one of the key areas where directors may have a conflict of interest and where due account should be taken of the interests of shareholders (EU Commission, 2004). Controversy surrounding directors' remuneration reflects the perception that payments have been excessive and that the lack of timely and adequate disclosure has resulted in increased information asymmetry and rent-extraction (Bebchuk et al., 2002, Jensen et al., 2004. The demand for public disclosure arises from information asymmetry and agency conflicts between directors and outside investors (Healy & Palepu, 2001). Disclosure on directors' remuneration would help to resolve such problems. It can reduce information asymmetry on complex remuneration arrangements that can be an important mechanism to transfer wealth from shareholders to directors (Bebchuk et al., 2002;Laksmana, 2008; Nelson et al., 2010). Moreover, directors' remuneration has been blamed for playing a central role in many international corporate scandals, as well as having been a key factor that contributed to the global financial crisis (e.g., Bebchuk & Fried, 2005). Consequently, regulators have been concerned that directors should be accountable to shareholders by disclosing their remuneration policies. In particular, the EU Commission (2004;) has issued two non-binding ...

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confidence: 66%