Market valuation of greenhouse gas emissions under a mandatory reporting regime: Evidence from the UK

This study provides evidence on the potential benefits of mandatory environmental reporting for listed firms’ market valuation. It takes advantage of recent regulation that requires all listed firms in the UK to report their annual greenhouse gas (GHG) emissions in their annual reports and shows that the magnitude of the negative association between GHG emissions and the market value of listed firms decreased after the introduction of the reporting regulation. This decline is attributed to regulation forestalling shareholders’ negative reflexive reaction toward firms’ carbon disclosures, as proposed by the theoretical work of Unerman and O’Dwyer (2007)

Social performance and social media activity in times of pandemic: evidence from COVID-19-related Twitter activity

Purpose The purpose of this study is to examine corporate disclosure of stakeholder-oriented actions on Twitter in response to COVID-19 during the pandemic outbreak and to empirically investigate whetherfirms’ social performance and their financial resilience impact on their engagement in, and communication of, stakeholder-oriented COVID-19 actions. Design/methodology/approach This study scrapes a sample of tweets communicated by major global listed firms between March 1, 2020 and April 30, 2020 and identifies disclosures that mention firm engagement in stakeholder-oriented actions in response to the COVID-19 pandemic. Cross-sectional regression analysis is used to examine the relationship between firms’ social performance and the number of tweets they post about stakeholder-oriented COVID-19 actions. Further, firms’ financial resilience is examined as a moderating factor of this relationship. Findings The results show that firms with better social performance are more likely to engage in and, hence, communicate stakeholder-oriented actions for the COVID-19 pandemic on Twitter. Moreover, it is evident that firms with better social performance communicate more stakeholder-oriented actions only when they belong to industries that have not been severely impacted by the pandemic. Originality/value This study has two important contributions. First, this study provides contemporary evidence of corporate disclosure of firms and their stakeholder-oriented actions on Twitter in response to the COVID-19 pandemic during the initial outbreak period. Second, it reveals insights into what characteristics drive firms to engage in costly corporate social responsibility (CSR) activities, and promote them on social media, in a period characterized by high economic uncertainty

Ethnic minorities, income inequalities and the COVID-19 pandemic: evidence from English local councils

This study examines the effects of ethnic minority populations and income inequalities on COVID-19 excess mortality within English local councils. We demonstrate empirically that councils with large ethnic minority populations and high-income inequalities exhibit higher excess mortality during the first wave of the pandemic. We further show that the association between a large ethnic minority population and high excess mortality is manifested significantly more in councils with larger income inequalities. Our findings call for immediate actions and long-term policies to address social and income inequalities as these inequalities affect population health conditions

THE IMPACT OF IFRS ON REPORTING FOR BUSINESS COMBINATIONS: AN IN-DEPTH ANALYSIS USING THE TELECOMMUNICATIONS INDUSTRY

The mandatory use of IFRS by all publicly listed companies in the European Union created challenges for accounting and reporting of business combinations, goodwill impairment and disclosures for these items. Major issues are allocation of amounts to goodwill and specific intangible assets arising from acquisition. This study presents an in-depth exploration of compliance with IFRS 3 and IAS 36 using content analysis methodology of annual reports of eight European telecommunications that were chose because the industry is well known for significant acquisitions involving intangibles. The results show only partial compliance with little change over the four year period since mandatory IFRS adoption. While results cannot be generalized outside this group, the in-depth analysis yielded important insights for continued research using broader research methods.IFRS, business combinations, goodwill, content analysis, annual reports, listed companies

Capital market consequences of integrated reporting: evidence from research analysts

The purpose of this study is to assess the market reaction to sell-side analysts’ recommendation revisions issued under an Integrated Reporting (IR) approach. The advocates of this new corporate reporting approach argue that IR enhances capital markets’ information environment by rendering investors better able to assess the value creation process of a firm. Recent empirical studies corroborate this argument. Considering the central role of financial intermediaries, we investigate whether the informativeness of analysts’ recommendation revisions is associated with the adoption of IR and the quality of integrated reports. We focus on the South African capital market which is the only setting where IR is mandated. Utilizing a sample of 2,636 recommendation revisions, we find strong evidence that analysts’ revisions exhibit economically and statistically significant lower information content under IR. Moreover, we find that upgrades and downgrades issued in the post-period are less informative when issued for firms with a high quality of integrated reports. These results are robust to a number of sensitivity analyses. Our findings have implications for capital market authorities as well as investors, considering that the benefit of acquiring advice from analysts becomes more marginal under an IR approach

Capital market consequences of integrated reporting: evidence from research analysts

The purpose of this study is to assess the market reaction to sell-side analysts’ recommendation revisions issued under an Integrated Reporting (IR) approach. The advocates of this new corporate reporting approach argue that IR enhances capital markets’ information environment by rendering investors better able to assess the value creation process of a firm. Recent empirical studies corroborate this argument. Considering the central role of financial intermediaries, we investigate whether the informativeness of analysts’ recommendation revisions is associated with the adoption of IR and the quality of integrated reports. We focus on the South African capital market which is the only setting where IR is mandated. Utilizing a sample of 2,636 recommendation revisions, we find strong evidence that analysts’ revisions exhibit economically and statistically significant lower information content under IR. Moreover, we find that upgrades and downgrades issued in the post-period are less informative when issued for firms with a high quality of integrated reports. These results are robust to a number of sensitivity analyses. Our findings have implications for capital market authorities as well as investors, considering that the benefit of acquiring advice from analysts becomes more marginal under an IR approach

Audit fees, non-audit fees and access to finance: Evidence from India

This paper examines the impact of audit and non-audit fees on firms’ ability to access finance by reducing their capital constraints. Unlike previous studies, which examined this phenomenon in developed economies, this paper focuses on one of the largest, albeit developing, economies in the world: India. India is an interesting empirical setting due to major concerns over the quality of the audit services offered, even by the Big 4 accounting firms. Following the limited attention theory, we argue that, in such settings where the effect of the Big 4 label is limited, capital providers will turn their attention to the fees paid as a more reliable proxy for audit effort. Employing a dataset of listed non-financial Indian firms from 2002 to 2017, we hypothesise and empirically demonstrate that both audit and non-audit fees are negatively associated with firms’ financial constraints. The findings indicate that finance providers see audit and non-audit fees as signals of high-quality audits that enhance the credibility of financial statements and in turn positively impact firms’ access to finance. The results remained unchanged after a battery of robustnes

Integrated thinking and sustainability reporting assurance: International evidence

Recently, there has been increasing demand by stakeholders for firms to demonstrate how they create value within the context of their operating environment. Consequently, a new reporting approach, integrated reporting (IR), was conceptualised with its development linked to the firm's integrated thinking (IT). Yet very little is known about the effects of IT on firms' reporting decisions. Hence, we investigate whether IT influences firms' decision to publish an assured sustainability report. Using an international dataset, we find that IT is positively associated with sustainability reporting assurance. We also find that this association is moderated by the type of legal system such that for firms in code law countries, the IT effects are reduced. Nevertheless, the effects of IT remain strong, indicating that IT is important for reporting decisions regardless of the firm's contextual setting. These findings have implications for policymakers and organisations interested in promoting high‐quality sustainability reporting

Value relevance of integrated reporting disclosures: evidence from the Johannesburg Stock Exchange

This research note aims to enrich our understanding regarding the market valuation implications of financial reporting under an Integrated Reporting (IR) approach. In order to do so, we focus on the Johannesburg Stock Exchange (JSE) and we examine whether the value relevance of summary accounting information (i.e., book value of equity and earnings) of firms listed on the JSE has enhanced after the mandatory adoption of an IR approach under the King III Report. Our study can be seen as a response to the recent calls for a closer investigation of the usefulness of the new reporting trend for investors. More specifically, our study can be seen as a response to the stance taken by the International Integrated Reporting Council (IIRC) Framework that the adoption of an IR approach improves the usefulness of financial reporting for investors. For our empirical tests we utilize a sample of 954 firm-year observations and employ a linear price-level model which associates a firm’s market value of equity with its book value of equity and earnings. In line with the IIRC Framework’s expectations, we find strong evidence of a sharp increase of the earnings’ valuation coefficient. However, contrary to the Framework’s stance, our results indicate a decline in the value relevance of net assets. Such a decline may be imputed to risks and/or unbooked liabilities that are revealed or measured more reliably after the introduction of an IR approach on the JSE. It should be noted, however, that despite its cause, the decline in the value relevance of net assets can be seen as a further argument in favor of the IIRC stance to assign equal importance to a wide range of “capitals,” such as human, social and natural capital. We believe that our findings are of particular interest to a wide range of regulators, standards setters, practitioners, and academics but first and foremost to the JSE and IIRC