The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study

Mechelli, Alessandro; Cimini, Riccardo; Mazzocchetti, Francesca

doi:10.1016/j.rcsar.2016.03.002

Cited by 15 publications

(8 citation statements)

References 46 publications

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“…Regarding non-financial entities, Bui et al (2018) assumed that risk culture, which refers to some shared values and beliefs held by a firm's employees (decision makers) towards risktaking, is embedded in the business models of the entities and is able to affect firm performance (Mechelli et al, 2017). Focusing on firms and not considering their sectors, Kuch (2017) talks about industrial risk culture in relation to the possible ways the risk of climate change might be managed.…”

Section: A Possible Explanation Of the Limited Integration Of The Research Communitymentioning

confidence: 99%

A systematic and bibliometric review on risk culture: a novel theoretical framework

Cimini

2021

JRF

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PurposeThis paper includes a systematic and bibliometric review of research products that address risk culture published between 1996 and 2019.Design/methodology/approachThe Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) protocol has been followed for the systematic literature review. As to the bibliometric analysis, a network helps the readers to identify the most prominent research, if any, in terms of mutual references.FindingsRisk culture has been extensively investigated under different perspectives by scholars who belong to a research community not so much integrated in terms of reciprocal references.Practical implicationsManagers, policy makers and politicians should learn that it is important to understand risk culture because the effectiveness of corporate strategies and reforms pass also through cultural values of people that determine their conduct in the everyday lives.Originality/valueBeing still lacking, this article contributes to the literature by providing a novel theoretical framework that reconciles the different approaches through which risk culture has been investigated. The framework explains that behind risk culture there are always people and their behaviour facing risk and uncertainty. In the extent, bounded rationality might produce (mis)perceptions of risks, a large variety of human behaviour, and so different risk cultures can be observed.

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Section: A Possible Explanation Of the Limited Integration Of The Research Communitymentioning

confidence: 99%

A systematic and bibliometric review on risk culture: a novel theoretical framework

Cimini

2021

JRF

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“…Banks are public trust institutions and are subject to specific regulatory requirements and consequently the detail and quality of reporting in such institutions is very high and more evolved than in other sectors. The findings presented by Mechelli et al [75] imply that companies belonging to the financial services sector, due to their high public accountability and strong interaction with customers, present the most strategy-related disclosure. Results provided by Zijl et al [76] also confirm that banks provide the most information on their strategy and that they dominate in the ranking in terms of providing social strategy and economic strategy disclosure.…”

Section: Methodsmentioning

confidence: 98%

Business Model Disclosure in the Reporting of Public Companies—An Empirical Study

2021

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Traditional financial reporting primarily discloses information about assets, equity, liabilities and financial situation of an enterprise. Simultaneously, socio-economic changes are prompting enterprises to implement business reporting towards disclosing activities for sustainable development and information about the business model in non-financial reporting. Shaping of an enterprise’s business model is carried out in the spirit of sustainable development, which is beginning to dominate the strategies of many large enterprises. At the same time, the concept of the business model and its reporting have still not been characterized in detail or standardized, which limits transparency and the usefulness of information. These phenomena provided an incentive to undertake the research on the business model reporting. The overall goal of this study is to expand research on disclosures about the business model in the corporate reporting of Polish listed companies, as well as to indicate the degree and directions of development of this subject against the background of the accounting system. The study also addresses the epistemological goal by entering the discussion on reporting about the business model. The research uses the financial statement content analysis method and the statistical method (Spearman’s correlation). The scope of disclosures about the business model are examined in integrated reports, consolidated reports, management reports, non-financial data reports and CSR reports of Polish companies listed on the stock market. This information is examined according to its four main components: inputs, business activities, outputs and outcomes. The correlation between the number of audited disclosures and selected economic and similar parameters characterizing enterprises (total assets, performance, board, EBITda, equity and liabilities) is also studied. The research reveals that entities preparing an integrated report demonstrate a greater number of disclosures of business model components in selected economic categories than entities that do not prepare such a report. Thus, the companies preparing an integrated report follow the mainstream of stakeholder theory, opting for a more descriptive reporting approach, accessible to a wider group of users. Moreover, business model information is often reported in a highly random manner. Simultaneously, descriptive forms of business model disclosure prevail over numerical ones, although not to a large degree. The findings also confirm that there is a positive correlation between the detail of disclosures about the business model and selected economic parameters of an enterprise (the strongest with total assets, board and EBITda). Thus, it becomes possible to recognize that large enterprises with a strong and stable structure of assets follow specific, more detailed reporting patterns aimed at sustainable development of reporting. At the same time, they are more likely to expand the scope of disclosures compared to smaller enterprises. This investigation responds to the interest of enterprises and other stakeholders in the reporting spectrum by increasing market information efficiency and transparency. Findings can also be used by standards setters, while providing new rules and regulations.

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“…Therefore, the BM also connects financial effects with non‐financial information about the competitive environment, the opportunities and risks of that environment, and the strategies a company applies to cope with those conditions (Singleton‐Green, 2012). Many empirical studies use the concept of BM as a framework to assess intellectual capital (Bini et al ., 2016), sustainability disclosures (Bini et al ., 2018), financial performance (Mechelli et al ., 2017), and performance indicators (Bukh, 2003).…”

Section: The Role Of the Business Model Concept In Reportingmentioning

confidence: 99%

“…Content analysis has been applied to the annual reports of a sample of 75 UK listed companies that operate in different, non‐financial industries to assess BM disclosure, for the period 2014 to 2016. Prior studies on BM disclosures rely on a BM framework to define a list of aspects that characterize BM a priori and subsequently search for descriptions of those elements in the annual reports (e.g., Bini et al ., 2016; Mechelli et al ., 2017; Bini et al ., 2019). A limitation of this kind of approach is that all information items are assigned equal importance, while companies rely on vastly different value creation patterns, that is, different BMs.…”

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confidence: 99%

“…Our findings show that BM disclosure is not directly priced by investors, but that it provides insights into earnings quality. This result is consistent with previous research showing that non‐financial disclosures shed light on how earnings are generated (Baboukardos and Rimmel, 2016; Reverte, 2016; Mechelli et al ., 2017) and that companies with more extensive (non‐financial) disclosure have more persistent earnings (Gregory et al ., 2016; Coulton et al ., 2014; Mahjoub and Khamoussi, 2013; Choi and Wang, 2009; Li, 2008; Lim and Tan, 2007). The findings of this research support the view expressed by the regulators that the BM acts as a framework providing a relevant context for other pieces of information.…”

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confidence: 99%

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Business Model Disclosures, Market Values, and Earnings Persistence: Evidence From the UK

Simoni

Schaper

Nielsen³

2021

Abacus

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This paper investigates the consequences of business model (BM) disclosures. Content analysis is used to assess the mandatory disclosure of BM in in 75 publicly listed companies' annual reports across a three‐year period (2014–2016). The research applies a novel content analysis methodology that considers the way in which the relevance of BM disclosures is dependent on which particular BM a given company adopts. The empirical results show notably low levels of BM disclosure and no significant association between BM disclosures and market value. However, we find that BM disclosure provides insights into earnings quality by means of enhanced earnings persistence. These findings reveal that information about the BM itself does not make a difference to investors when it is not linked to financial outcomes. Instead, BM acts as a framework for organizing other disclosures, and provides complementary information about value generation, helping users understand how earnings are generated. These results are important for informing the policy‐making process around extra‐financial disclosures (e.g., EU Directive 2014/95/EU) and answer calls for research to inform future improvements to corporate and integrated reporting.

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The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study

Cited by 15 publications

References 46 publications

A systematic and bibliometric review on risk culture: a novel theoretical framework

A systematic and bibliometric review on risk culture: a novel theoretical framework

Business Model Disclosure in the Reporting of Public Companies—An Empirical Study

Business Model Disclosures, Market Values, and Earnings Persistence: Evidence From the UK

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