Moral Licensing and Disclosure

Market participants continue to demand greater transparency from boards of directors, yet little is known about the effect of increased transparency on board member decisions. We provide initial evidence that increased transparency via disclosure can license board members to make biased decisions that they may otherwise not make in the absence of disclosure. We find no evidence that increasing the level of disclosure (disclosure to the auditor versus disclosure to the auditor and public) had an impact beyond a base level of disclosure. An important implication of these findings, relevant to current projects at both the PCAOB and the SEC, is that increased transparency via disclosure of board member decisions may result in the unintended consequence of greater bias in financial reporting. The knowledge gained form this study may help to improve regulations surrounding targeted transparency disclosures in financial reporting

The effect of DEFRA guidance on greenhouse gas disclosure

This paper investigates the effect of the 2009 guidance of the Department for Environment, Food & Rural Affairs on greenhouse gas (GHG) disclosure. The sample comprises 215 companies from a population of London Stock Exchange FTSE 350 companies over four years (2008e 2011). To quantify GHG disclosure, a research index methodology is employed, with information derived from several GHG reporting frameworks. The econometric model is estimated using panel fixed effects. Our findings suggest that the publication of the 2009 guidance has had a significant effect on the level of GHG disclosure, and that corporate governance mechanisms (board size, director ownership, and ownership concentration) also affect the extent of GHG information disclosure. The results also indicate that companies increased their disclosures prior to the 2009 guidance in anticipation of its publication. These results have important implications for the government, suggesting that non-mandatory guidance could increase disclosure as much as do mandatory requirements

Moral Licensing and Disclosure

Market participants continue to demand greater transparency from boards of directors, yet little is known about the effect of increased transparency on board member decisions. We provide initial evidence that increased transparency via disclosure can license board members to make biased decisions that they may otherwise not make in the absence of disclosure. We find no evidence that increasing the level of disclosure (disclosure to the auditor versus disclosure to the auditor and public) had an impact beyond a base level of disclosure. An important implication of these findings, relevant to current projects at both the PCAOB and the SEC, is that increased transparency via disclosure of board member decisions may result in the unintended consequence of greater bias in financial reporting. The knowledge gained form this study may help to improve regulations surrounding targeted transparency disclosures in financial reporting

Groundwater Flow and Capture Zone Analysis of the Central Passaic River Basin, New Jersey

Delineating capture zones of pumping wells is an important part of safe drinking water and well protection programs. Capture zones or contributing areas of a groundwater extraction well are the parts of the aquifer recharge areas from which the wells draw their water. Their extent and location depend on the hydrogeologic conditions such as groundwater recharge, pumping scenario and the aquifer properties such as hydraulic conductivity, porosity, heterogeneity of the medium and hydraulic gradient. Different methods of delineation can be used depending on the complexity of the hydrogeologic conditions. In this study, a 3-dimensional transient numerical MODFLOW model was developed for the Central Passaic River Basin (CPRB), and used with a MODPATH particle tracking code to determine 3-dimensional transient capture zones. Analytically calculated capture zones from previous studies at the site were compared with the new numerically simulated capture zones. The study results revealed that the analytical solution was more conservative, estimating larger capture zones than the numerical models. Of all the parameters that can impact the size, shape and location of a capture zone, the hydraulic conductivity is one of the most critical. Capture zones tend to be smaller in lower hydraulic conductivity areas

The Impact of Conservatism and Supply Chain Finance on Bad Debt Expense

Standard accrual models assume a linear relation between accruals and changes in sales. However, due to conservatism, working capital items such as receivables can be written off but are rarely written up, creating an asymmetry that linear models do not capture. We compare the modified Jones model with models based on accounting methods for bad debt expense (BDE). We find that models that incorporate conservatism have much better explanatory power, especially during recessions when write-offs are bigger. Moreover, modeling conservatism highlights the effect of contracting innovations that influence the risk of receivables and hence BDE. We find that supply chain finance, which has gained popularity after the 2007-08 financial crisis, contributed to recent decreases in the levels and volatilities of write-offs and BDE. Our study highlights the importance of modeling individual accruals using accounting methods, adjusting for conservatism, and incorporating business innovations that affect accounting practice

Battling for the environment on Peng Chau

published_or_final_versionJournalism and Media Studies CentreMasterMaster of Journalis

The effect of Regulation Fair Disclosure on expectations management: International evidence

We examine whether Regulation Fair Disclosure (Reg FD) was effective in limiting the expectations management of US firms as well as ADR and foreign-listed firms to meet or beat analysts' earnings forecasts. Domestic US firms are required to comply with Reg FD; however, ADR firms are explicitly exempted from its provisions. Thus, ADR firms are thought to represent a control against which US firm expectations management is measured. We find a decrease in expectations management for both US and ADR firms. We find that the post-Reg-FD changes for US and ADR firms are not significantly different. This suggests Reg FD was not effective in limiting forecast guidance or, alternatively, both US and ADR firms responded to Reg FD by reducing forecast guidance. We provide additional evidence that ADR firms experienced a significant decrease in expectations management relative to other foreign-listed firms suggesting that ADR firms voluntarily complied with Reg FD. Overall, our evidence suggests that Reg FD worked to reduce expectations management to meet or beat expectations for both US and ADR firms.