An experimental investigation of reputation effects of disclosure in an investment/trust game

This paper Examines experimentally the reputation building role of disclosure in an investment/trust game. It provides experimental evidence in support of sequential equilibrium behavior in a finitely repeated investment/trust game where information asymmetry raises the possibility of voluntary disclosure. I define two regimes, namely disclosure regime and no-disclosure regime and it is only in the disclosure regime that such disclosure of private information is a possibility. I compare investment levels across two regimes and find the startling result that investment is lower in disclosure regime. I find that this lower investment is attributable to the fact that the prior probability with which an investor in the disclosure regime believes that a manager is trustworthy is significantly lower than the prior probability with which an investor in the no-disclosure regime believes that a manager is trustworthy. I introduce a two-stage experimental design to homogenize prior beliefs about managers' trustworthiness and find that after such homogenization, investment is higher in disclosure. © 2013 Elsevier B.V

Disclosure and Cross-listing: Evidence from Asia-Pacific Firms

Purpose – The purpose of this paper is to examine whether both country disclosure environment and firm-level disclosures are associated with cross-listing in the USA or London or otherwise. Design/methodology/approach – The authors test the association using a sample of Asia-Pacific firms covered in the Standard and Poor\u27s, 2001/2002 disclosure survey, capturing the country-level disclosure using the Center for International Financial Analysis and Research (CIFAR) score. The firm-level disclosure is measured using the S&P disclosure score. The authors conduct a logistic regression analysis and a two-stage least squares analysis to examine whether the outcome, cross-listing or not, is associated with the country disclosure environment and firm-level disclosures. Findings – The authors find that Asia-Pacific firms from weak disclosure environments and having higher firm-level disclosure scores are more likely to seek listing in the USA. Further, the paper provides initial evidence that these Asia-Pacific firms are as likely to seek listing in London as in the USA. No significant difference was found in S&P scores between US and London cross-listings after controlling for the effects of other variables. This suggests that firms that cross-list in London present similar disclosure levels to firms that cross-list in the USA. Originality/value – The paper\u27s findings contribute to the cross-listing literature on disclosure by showing that the interaction between firm-level disclosure and country-level disclosure has an impact on whether a firm cross-lists in the USA/London or not. The authors\u27 comparison of US cross-listings versus London cross-listings provides the first evidence that disclosures of US and London cross-listings are not significantly different

Show Me the Money: The CEO Pay Ratio Disclosure Rule and the Quest for Effective Executive Compensation Reform

This Note discusses past attempts to combat growing levels of executive compensation, analyzes the role of both shareholders and directors in the compensation-setting process, and discusses conflicting views concerning shareholder-director power, the disclosure mechanism, and the pay-ratio metric. Finally, this Note balances these views by proposing alterations to the CEO Pay Ratio Disclosure Rule that preserve the long-standing corporate structure, while also offering shareholders an accountability mechanism to enhance the Rule’s intended results

Disclosure of Maternal HIV Status to Children: To Tell or Not To Tell . . . That Is the Question

HIV-infected mothers face the challenging decision of whether to disclose their serostatus to their children. From the perspective of both mother and child, we explored the process of disclosure, providing descriptive information and examining the relationships among disclosure, demographic variables, and child adjustment. Participants were 23 mothers and one of their noninfected children (9 to 16 years of age). Sixty-one percent of mothers disclosed. Consistent with previous research, disclosure was not related to child functioning. However, children sworn to secrecy demonstrated lower social competence and more externalizing problems. Differential disclosure, which occurred in one-third of the families, was associated with higher levels of depressive and anxiety symptoms. Finally, knowing more than mothers had themselves disclosed was related to child maladjustment across multiple domains. Clinical implications and the need for future research are considered

A tale of three countries, dispersed ownership and greater risk taking levels by management: risk monitoring tools in bank regulation and supervision – developments since the collapse of Barings Plc (re – visited)

This paper is aimed at explaining why higher concentrations of the ownership of large firms do not necessarily and automatically facilitate lower risk taking levels – where there is scope for the abuse of powers. As well as illustrating why effective corporate governance systems are essential in facilitating high levels of monitoring, accountability and disclosure, the paper also highlights why a consideration of the costs of ownership concentration and its benefits, is required in determining whether corporate governance systems will be effective or not.corporate governance; ownership structures; banks; risk; regulation; monitoring; disclosure; accountability; liquidity; internal controls

The relevance of time in framing the sanctions framework for defective disclosure

Sanctions imposed on listed companies in cases of breached disclosure obligations have steadily but rather slowly been moving towards a harmonized approach in EU corporate law. Without compromising the potential efficiency of these harmonisation measures, this article aims to propose an alternative method to increase the efficiency of sanctions. By focusing on the importance of time as an element that influences corporate decisions in relation to the breach of disclosure obligations, this article seeks to re-frame the importance of sanctions and to link their severity to the element of time that is potentially instrumentalised by listed companies. This study argues that by linking sanctions and time, the legal framework would be likely to apply more severe sanctions, while adopting differentiated sanctions depending on which disclosure obligations are breached. This new approach aims to trigger a de facto harmonisation trend amongst regulators and judges at the national and EU levels

Developing a self-report measure to assess disclosure strategies in adult male prisoners and its association with personality

Purpose – The current study aims to report on the development of a self-report measure of disclosure strategies in adult male prisoners (violent and acquisitive offences) and its association with personality and self-esteem. Design/methodology/approach – The study employed an adapted version of the Delphi technique to develop initial items for inclusion in the new disclosure measure (Disclosure Management Questionnaire: DMQ). This element of the study utilised an “expert sample” of forensic psychologists. A total of 94 prisoners then completed the developed measure. Factor analysis was utilised to explore the structure of the measure, which subsequently allowed associations between disclosure strategies, personality and self-esteem to be identified. Findings – Analysis revealed a measure of disclosure (the DMQ) comprising four subscales: Exploratory Engagement, Placatory/Evasive Engagement, Passive Resistance and Active Resistance. Significant correlations were identified between the personality trait Neuroticism and higher levels of Placatory/Evasive Engagement and Active Resistance of forensic clients during the disclosure process. Self-esteem was also found to correlate with disclosure, in that high trait self-esteem was found to be associated with higher exploratory engagement, whereas low trait self-esteem was associated with higher levels of active resistance of the disclosure process. Originality/value – Developing an understanding of the nature and function of disclosure and how these relate to individual factors such as personality (including trait self-esteem) provides valuable knowledge and alternative ways of supporting forensic clients in discussing difficult issues related to their offending

Levels of voluntary disclosure in IPO prospectuses : an empirical analysis

This paper focuses on how forecasts information is disclosed in IPO prospectuses. In France, managers report either detailed forecasts or only a brief summary. We investigate the determinants and consequences of the varying levels of detail provided in these forecasts. Based on a sample of 82 IPOs on the Euronext Paris market (2000-2002), we show that only two variables are associated with highly detailed forecast disclosures: forecast horizon and firm age. We also find that the forecast error decreases as the level of detail in the forecast disclosures increases. This finding is robust to our reverse causality test (Heckman two-stage self-selection procedure) and suggests that the level of detail in forecast disclosures enhances the reliability of earnings forecasts.IPO; forecast disclosure; forecast error

Incentives for pollution control - regulation and public disclosure

An increasing number of regulators have adopted public disclosure programs to create incentives for pollution control. Previous empirical analyses of monitoring and enforcement issues have focused strictly on the impact of such traditional practices as monitoring (inspections) and enforcement (fines and penalties) on polluters'environmental performance. Other analyses have separately focused on the impact of public disclosure programs. But can these programs create incentives in addition to the normal incentives of fines and penalties? The authors study the impact of both traditional enforcement and information strategies in the context of a single program, to gain insights into the relative impact of traditional (fines and penalties) and emerging (public disclosure) enforcement strategies. Their results suggest that the public disclosure strategy adopted by the province of British Columbia, Canada, has a greater impact on both emission levels and compliance status than do orders, fines, and penalties traditionally imposed by the courts and the Ministry of the Environment. But their results also demonstrate that adopting stricter standards and higher penalties also significantly affected emission levels. Policymakers, take note: 1) The presence of strong, clear standards together with a significant, credible penalty system sends appropriate signals to the regulated community, which responds by lowering pollution emissions. 2) The public disclosure of environmental performance creates strong additional incentives to control pollution.Public Health Promotion,Water and Industry,Water Conservation,Environmental Economics&Policies,Health Monitoring&Evaluation,Environmental Economics&Policies,Water and Industry,Health Monitoring&Evaluation,Sanitation and Sewerage,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL

Who cares about Director Independence?

In this article we have expanded the analysis of the new dataset we created in Santella, Paone, Drago (2005) which analysed and quantified corporate disclosure on directors formally identified as independent by the forty Italian Blue Chips. We find here a general low level of compliance with independence requirements for both financial and non-financial companies, particularly with regard to the two key independence criteria of not having too many concurring commitments and not having business relationships with the company or an associated company. We also find that financial companies show a lower level of compliance than non-financial ones and are connected with each other and with a few non-financial companies through networks of cross-directorships: two directors (one independent and one executive) who also sit at the same time on another company board. Finally, those non-financial companies that have a relatively fragmented shareholder structure tend to be characterised by higher levels of compliance and disclosure (but not always by lower levels of not compliance) than tightly-controlled non-financial companies, presumably because of sensitivity to a larger pool of small shareholders. Peculiarly, financial companies with fragmented shareholder structure tend to be characterised by low disclosure levels, although such companies are also subject to strong financial supervision.corporate governance; independent directors; interlocking directorships; empirical legal studies