The effect of voluntary disclosure, ownership structure and proprietary cost on the return–future earnings relation

Luo, Shuqing; Courtenay, Stephen M.; Hossain, Mahmud

doi:10.1016/j.pacfin.2006.02.002

Cited by 55 publications

(46 citation statements)

References 49 publications

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“…Following earlier work (Kent and Ung, 2003;Luo et al, 2006;Lim et al, 2007), this study adds several control variables to the analysis model: company size, measured by the natural logarithm of the company's total assets; and profitability measured as return on assets (net income divided by total assets) (Campbell and Mínguez-Vera, 2008). Company types are a dummy variable that takes the value one if the company is operating in the industrial sector and 0 otherwise (Peni and Vähämaa, 2010).…”

Section: Control Variables -Company Characteristicsmentioning

confidence: 99%

The effect of the CEO’s characteristics on EM: evidence from Jordan

Alqatamin

Aribi

Arun

2017

IJAIM

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Purpose This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices. Design/methodology/approach The authors use panel data for 201 non-financial companies listed on the Amman Stock Exchange (ASE) for the period 2008-2013. The authors use random effect models to test the hypothesis of this study and extent the analysis to family versus non-family. Findings The study finds a positive relation between CEO’s overconfidence and EM practices in Jordan. Moreover, the findings reveal that managers in family companies are more likely to engage in EM practices than non-family companies. The findings shed more light on the intricate relationship between CEO’s characteristics, the decision-making process and financial reporting. Practical implications Results of this study could be beneficial for a number of users of financial information such as investors, auditors, regulators, lenders, as well other players in the capital market to make right decisions. Originality/value A literature review finds that much less studies have investigated the relationship between EM practices and personal CEO characteristics (gender and overconfidence) in developing countries such as Jordan. Furthermore, no study yet has examined the influence of CEO age on EM practices. The authors extend previous literature by providing empirical evidence about effect of some personal CEO’s characteristics on EM practices.

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Section: Control Variables -Company Characteristicsmentioning

confidence: 99%

The effect of the CEO’s characteristics on EM: evidence from Jordan

Alqatamin

Aribi

Arun

2017

IJAIM

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“…Bergstresser and Philippon (2006) find that the more closely a CEO's compensation is tied to the value of stock and options the more likely that discretionary accruals will be used to manipulate profits. For a sample of Singaporean firms, Luoa et al (2006) find that higher levels of managerial ownership moderate the usefulness of voluntary disclosures on the returns-future earnings relation. The above studies suggest that monitoring is weaker at higher managerial ownership levels, and therefore we expect a positive association between the managerial ownership variable and errors from AIFRS adoption.…”

Section: Managerial Ownership (Mo)mentioning

confidence: 87%

Corporate Governance and the Prediction of the Impact of AIFRS Adoption

Goodwin

Ahmed

Heaney

2009

Abacus

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This study examines whether a firm's corporate governance system, particularly with respect to the characteristics of the board of directors and senior management, affects how accurately the impact of accounting changes is reported to shareholders. We concentrate on the relation between corporate governance measures and accounting forecast errors that arise with adoption of the International Financial Reporting Standards by listed Australian firms. Evidence reveals that corporate governance mechanisms are associated with the likelihood and magnitude of managerial forecast errors.Key words: AIFRS, adoption; Corporate governance, mechanisms; Errors.It is widely accepted that sound financial disclosure mitigates agency problems by bridging the information asymmetry gap existing between management and shareholders. In contrast, poor financial disclosure often misleads shareholders and has adverse effects on their wealth. In recent years, researchers have found that corporate ownership structure and board composition affect financial reporting quality, proxied by management forecast precision, earnings restatements and voluntary disclosure of informational items (e.g., Bamber and Cheon, 1998;Eng and Mak, 2003;Ajinkya et al. , 2005;Karamanou and Vafeas, 2005;and Beekes and Brown, 2006). Karamanou and Vafeas (2005) find that attributes of corporate boards and audit committees are positively associated with voluntary disclosure of management earnings forecasts and that these forecasts are more precise when the board of directors and audit committees are effective. A recent study of Australian listed entities (Beekes and Brown, 2006) finds that a firm's corporate governance quality is positively associated with disclosure quality, as measured by its informativeness to the securities market.

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“…As a result the growth of disclosure and its significance to stakeholders is expected to increase (Gray, Javad, Power, & Sinclair, 2001). Through greater disclosure it reveals a company's private information which reduces investor uncertainty thus protecting investors and influencing market expectations (Luo et al, 2006). Therefore, through disclosures it allows the public to examine the quality of management decisions and their use of resources (Bhasin & Reddy, 2011).…”

Section: Prior Studiesmentioning

confidence: 99%

“…However, through the weighted approach it can lead to a bias analysis as the weights of the variables are subject to the analyst's perceptions (Hossain & Hammami, 2009;Luo et al, 2006). As a result the weighted and un-weighted measurement approaches could be used as a substitute for each other.…”

Section: Initially To Determine What Nmd Is and What Is Not Various Imentioning

confidence: 99%

“…The voluntary disclosure environment in developed countries as suggested by Luo, Courtenay, and Hossain (2006) is rich; therefore, as Fiji is a developing country the investigation should be able to capture the NMD and influences for voluntary disclosing information. This investigation contributes to prior literature on the influences in the variation of NMD, especially from the perspective of a developing country, and adds to the limited NMD research on Fiji.…”

Section: Introductionmentioning

confidence: 99%

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Developments in non-mandatory disclosures in annual reports of companies: a case study

Sharma

Low

Davey

2013

IJEA

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Abstract:The paper investigates the extent of non-mandatory disclosure of information (NMD) in the annual reports of the 17 companies listed on the South Pacific Stock Exchange (SPSE) in Fiji, a developing country, and whether NMD by these companies has changed over time providing additional and useful information to stakeholders. The empirical data was gathered from the years 2008 to 2010 to provide a clear picture of the change in the level and extent of NMD, and its influences over the periods 2008 to 2010. It can be seen from the Fiji perspective that the mandatory requirements tend to have a financial focus. However, it would be expected that the level of company disclosures would have changed over time, with not only global market forces but through differing societal values which have increased the frequency and demand of non-mandatory reporting by companies. All companies showed some degree of NMD, and on average this demonstrates an increasing trend. The stakeholders are receiving more information about a company's activities. The companies were analysed in light of recent developments in corporate governance by the Capital Markets Development Authority (CMDA) implementing their 10 corporate governance principles. This became a major driver of the increase in NMD levels of the disclosures in the annual reports of the listed companies. However, a large variation still exists between the level and extent of the NMD and the different listed companies. The minimum disclosure level found over the three years was 9.09 percent, which has increased to a minimum of 13.66 percent in 2010, and the maximum disclosure level over the three years was 81.82 percent. The findings for the extent of NMD was also similar where the minimum words used in NMDs was 114, increasing to 854 in 2010, and the maximum disclosure extent over the three years was 21,414 words. However, it was found that the measurement of counting words tended to fluctuate over different periods where significant events took place that affected the company. Therefore, it was established that disclosure is impacted by what happens in the reporting period, and can explain why one period may have greater disclosure than another.

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The effect of voluntary disclosure, ownership structure and proprietary cost on the return–future earnings relation

Cited by 55 publications

References 49 publications

The effect of the CEO’s characteristics on EM: evidence from Jordan

The effect of the CEO’s characteristics on EM: evidence from Jordan

Corporate Governance and the Prediction of the Impact of AIFRS Adoption

Developments in non-mandatory disclosures in annual reports of companies: a case study

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