Baltic Listed Companies´ disclosure quality – far ahead or lagging behind?

The objective of this paper is to determine the level of average quality of disclosures made in English by biggest companies listed on Baltic stock exchanges and to analyse it in the context of biggest companies listed on other Central and Eastern European (CEE) and three developed European (EU) stock exchanges. Content analysis reveals that the disclosure quality level of Baltic listed companies outperforms that of other CEE peers by at least 30% and in the context of stock exchange web page disclosures 50 to 80%. Compared to companies listed on developed EU stock exchanges, the disclosure quality of Baltic listed companies is slightly lower in the company home page category, however, it outperforms in the context of stock exchange web page disclosures. This result raises concerns about possibly too restrictive stock exchange web page disclosure regulations which may have a negative impact on the future outlook of Baltic stock exchanges

Market Liquidity and Public Announcements' Disclosure Quality on Tallinn, Riga, and Vilnius Stock Exchanges

This paper investigates the association between market liquidity and public announcements' disclosure quality on three emerging markets in the Baltics—the Tallinn, Riga, and Vilnius Stock Exchanges. The results show that disclosure quality, disclosure quantity, and above average disclosure quality level of the current year reduces the spread on the following year, as expected. The increase in disclosure quality level leads to greater volume on the same year; higher disclosure quality leads to lower illiquidity ratio on the following year; increase in disclosure quality, number of announcements, and above average disclosure level leads to higher volatility on the same year; and increase in number of announcements leads to higher combined liquidity measure on the following year, as expected. Still, unlike in previous studies, the spread and illiquidity ratio seem to react more slowly to the disclosure quality/quantity change compared to volume and volatility.disclosure quality, emerging markets, market liquidity, public announcements,

Measuring Public Announcements’ Disclosure Quality on Tallinn, Riga and Vilnius Stock Exchanges

Previous literature has been occupied with measuring disclosure quality in financial reports and no indication has been provided on how the quality of public announcements could be measured. The purpose of this paper is to introduce a methodological approach to its measurement and to illustrate its implementation possibilities in the context of Tallinn, Riga and Vilnius Stock Exchanges. The disclosure quality measure proposed was based on six quality attributes (informativeness, relevance, precision, rarity, frequency, and unexpectedness) defined in the context of information theory and operationalised through finance/accounting and cognitive psychology theories. Implementation in the context of three capital markets confirmed that there has been an increase in disclosure quality over time. Company size and stock exchange where the company was listed affected its disclosure quality level. Main areas for disclosure quality improvement were identified and the results also indicated that small firms and companies with low quality disclosures tended to be less prone to disclosure quality improvement.Disclosure, public announcements, emerging markets

Perils of excessive credit growth: evidence from 11 new EU member states

We investigate the association between banks' credit expansion and loan loss reserves on a panel of banks from 11 new EU member countries from Central and Eastern Europe during 2004–2010. Unused committed credit lines capture the decline in banks' risk aversion being associated with a supply shift. As the existence of loan commitments may lead to overlending, we expect that banks with a higher share of unused committed credit lines are more prone to subsequent increase in loan loss reserves. The system and difference GMM estimations as well as pooled OLS and panel fixed effects estimations confirm that an excessive credit supply, reflected in overextension of committed credit lines, predicts increase in bank loan loss reserves two years ahead while controlling for bank asset returns, real growth in loan portfolio, country GDP, inflation and EBRD banking sector reform index. This stresses the importance of credit lines monitoring by regulatory and supervisory authorities for timely recognition of credit overextension episodes. The negative association between loan loss reserves and real GDP growth was affirmed

Institutional Drivers of Crowdfunding Volumes

Crowdfunding improves access to financing, yet cases of crowdfunding’s importance, besides traditional financing, are rare and notably localized. In explaining why global crowdfunding volumes are so heterogeneous, previous academic research has focused mainly on the existence of a legal system that is supportive of crowdfunding, but with conflicting results. We argue that a broader range of institutions must be considered to describe the spread of crowdfunding at its current early stage of development, and provide first empirical evidence on the matter. Using a dataset covering crowdfunding volumes of 122 countries over the years 2015–2016, we confirm that the existence of crowdfunding-specific regulations has a positive association with total crowdfunding volumes per capita. We also find that regulation targeted at a specific type of crowdfunding has an economically stronger association with corresponding transaction volumes. In line with our argument, we find that a significantly broader range of less crowdfunding-specific institutions exhibit strong ties to crowdfunding volumes, with strong e-service culture emerging as an especially robust determinant of all types of crowdfunding volumes. Stronger legal rights, greater financial freedom, and higher democracy levels are also associated with greater total crowdfunding volumes, but exhibit varying relevance across different types of crowdfunding