Arena, Claudia (2013) Corporate disclosure in the capital market: the role of the governance system. [Tesi di dottorato]

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Item Type: Tesi di dottorato
Lingua: English
Title: Corporate disclosure in the capital market: the role of the governance system
Creators:
CreatorsEmail
Arena, Claudiaclaudia.arena@unina.it
Date: 25 March 2013
Number of Pages: 230
Institution: Università degli Studi di Napoli Federico II
Department: Economia, Management e Istituzioni
Scuola di dottorato: Scienze economiche e statistiche
Dottorato: Scienze aziendali
Ciclo di dottorato: 25
Coordinatore del Corso di dottorato:
nomeemail
Caldarelli, Adeleadele.caldarelli@unina.it
Tutor:
nomeemail
Viganò, Riccardoricvigan@unina.it
Date: 25 March 2013
Number of Pages: 230
Uncontrolled Keywords: Disclosure, Corporate Governance
Settori scientifico-disciplinari del MIUR: Area 13 - Scienze economiche e statistiche > SECS-P/07 - Economia aziendale
Date Deposited: 10 Apr 2013 11:59
Last Modified: 22 Apr 2016 01:00
URI: http://www.fedoa.unina.it/id/eprint/9109

Abstract

Recently, important changes have taken place in the firm’s institutional and information environment (e.g. Sarbanes Oxley Act, Regulation Fair Disclosure, IFRS) aiming at increasing the level of transparency and disclosure. Consistently, the empirical literature has provided new evidence on the relationship among internal corporate governance system, institutional features and several dimensions of disclosure policies. Review studies of disclosure and corporate governance literature have also been developed in order to have a systematic classification of the recent advances made in these fields (Beyer et al., 2010; Dechow et al., 2010; Brown et al., 2011; Armstrong et al., 2010). The objective of this thesis is to contribute to the large mosaic of theory and evidence concerning the role of corporate governance for disclosure policies, focusing on the relationship among different sources of corporate information. A large body of literature claims that the role of disclosure is pivotal for the capital market efficiency (Healy & Palepu, 2001). Research shows that financial reporting quality and voluntary disclosure improve stock market liquidity (Healy et al., 1999), reduce information asymmetries and cost of capital (Botosan & Plumlee, 2002; Easley & O’Hara, 2004). Although it is widely acknowledged that firms’ governance structure affects disclosure choices (Dechow et al., 1996; Vafeas, 2000; Klein, 2002), there is still an open debate on whether disclosure acts as a complement or a substitute for other corporate governance mechanisms (LaPorta et al., 1998; Shleifer & Vishny, 1997; Beekes & Brown, 2006). To date, existing empirical studies on the relation between governance and disclosure and their capital market effects selectively focus on a single aspect of a firm’s information environment such as financial accounting information (e.g. accounting quality), or alternatively, different features of voluntary disclosure, mainly ignoring interdependencies and complementarities among various sources of corporate information (i.e. financial accounting information, mandatory non-accounting information and voluntary disclosures). Nevertheless, financial reporting environment is complex and develops endogenously in order to solve information asymmetries between insiders and outsiders as well as agency problems between principals and agents (Beyer et al., 2010). Therefore, the economic role of financial reporting cannot be evaluated separately from other sources of corporate information, since mandatory and voluntary disclosures can either complement or substitute each other (Ball et al., 2011). Moving from this line of research this thesis investigates (i) the nature of the relationship between mandatory and voluntary disclosure (ii) the role of internal and external corporate governance characteristics for the managers’ decision to disclose information not mandated by the law (iii) the influence of the governance system on the informativeness of corporate narratives across alternative disclosure media. This way, it answers the recent call in the accounting literature for considering the interdependencies between various factors that shape the corporate information environment (Beyer et al., 2010). It also allows to gain a deeper understanding of the trade-offs between monitoring mechanisms and corporate transparency and among various monitoring mechanisms as well as sources of corporate information. The thesis is structured in two sections. The first section reviews contributions to these topics from accounting, finance, and corporate governance literature in order to build a framework for the analysis of the relationship between corporate governance, accounting and other disclosure policies in the capital market. The second section presents two empirical analyses based on archival and hand-collected data that, using a deductive approach, investigate interrelated research questions. The first empirical study aims at understanding to what extent the firm’s internal and external governance characteristics affect voluntary disclosure strategies and their interaction with mandatory disclosure. To clearly distinguish between mandatory and voluntary information, the analysis is focused on the risk disclosure provided by Oil&Gas companies. In such a setting this study examines if firms voluntary disclosure choices are affected by their own mandatory disclosure strategies (substitute vs. complement). As related question, it analyses the influence of the board-based monitoring (firm-level incentives) and the strength of the institutions (country-level incentives) on the decision to disclose voluntary information. The second empirical research examines whether the firm’s governance characteristics and its accounting policies affect the informational value of discretionary strategies in corporate narratives. The focus is on environmental information provided by Oil&Gas companies, that are at the centre of a debate on their potential for increasing firms’ accountability towards stakeholders, versus being just another tool for corporate public relations (Cho et al., 2012). This study investigates if managers use environmental disclosure to opportunistically affect the users’ perception of corporate achievement (i.e. impression management), or rather provide useful information for predicting future environmental performance. In addition, it explores whether and to what extent the informativeness of discretionary disclosure strategies varies according to reporting incentives coming from the board of directors’ characteristics. The thesis concludes with a discussion of the empirical findings, their contribution to the theoretical framework, limitations and directions for future research.

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