The quality of mandatory non-financial (risk) disclosures: the moderating role of audit firm and partner characteristics

Risk disclosures are among the most important types of non-financial information valued by investors. Risk disclosures are mostly narrative, proprietary in nature and, consequently, the importance of their accuracy and assurance is high to prevent them becoming boiler-plate and lose their relevance. By exploiting the unique features of a setting in which risk disclosure is mandatory and under a positive assurance requirement, we investigate whether the quality of audited risk disclosures is associated with the type of audit firm (Big-4 vs. non-Big-4), the characteristics of the audit firm and the attributes of the audit partner. Our results show an association between risk disclosure quality and auditors, but not in the ways that one would have expected. After the enforcement of a regulation that requires a detailed description of risks in the Operating and Financial Review (OFR) and a positive assurance of external audit over these disclosures, we do not document any significant Big-4 effect. The quality of risk disclosures is associated with the attributes of the audit partner, namely familiarity with different client risk disclosures, expertise and gender, independently from her belonging to a Big-4 audit firm. Along this way, we extend the recent evidence on the audit partner effects in the assurance of non-financial narrative information

Board monitoring and internal control system disclosure in different regulatory environments

Article"This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."Purpose This paper investigates two research questions: Is ICS disclosure, as a monitoring mechanism, associated with the characteristics of the board of directors, particularly the audit committee as the main board committee devoted to the effectiveness of ICS? Does the regulatory environment, particularly the regulation on ICS disclosure as an external governance/monitoring mechanism play a role in shaping the relationship between board monitoring and ICS disclosure and, if so, how? Design/methodology/approachWe study the ICS disclosure of 149 companies listed in four European financial markets (London, Paris, Frankfurt, and Milan), each with its own regulations about ICS disclosure, during a six-year period (2003–2008). Findings Our findings support an inverse association between the extent of ICS disclosure and our proxies for board monitoring. We also find a statistically significant negative relationship between board monitoring and substantial ICS disclosure but no relationship between board monitoring and formal ICS disclosure. Our evidence also shows that the regulatory environment moderates the relationship between board monitoring and ICS disclosure by introducing trade-offs among monitoring mechanisms. Research limitations/implications An important caveat of our research is that we do not provide evidence on the way users can make the availability of substantial information on the effective functioning of ICS a useful tool for their monitoring activity. Practical implications We propose a framework for the analysis of ICS disclosure that overcomes limitations of previous literature that has neglected the importance of the content beyond the extent of ICS disclosure. Through this framework researchers, practitioners and standard setters are able to separate merely descriptive, formal un-useful disclosure (boilerplate information) on the composing elements of the ICS from substantial disclosure regarding the functioning of the ICS (monitoring function). Originality/value We propose a framework for the analysis of ICS disclosure that considers the importance of the content of ICS disclosure, rather than its extent. Through this framework, researchers, practitioners, and standard-setters can separate merely formal, uninformative disclosure (boilerplate information) on the elements of the ICS from substantial disclosure regarding its functioning (monitoring function). We also provide evidence that the relationship between board monitoring and ICS disclosure varies with the content of the information communicated, thus offering guidance for future research not to focus on measuring the extent or quantity of disclosure but on the variety and complexity of the information communicated

Impression management and organizational audiences: The Fiat Group case

Author's accepted manuscript. The final publication is available at Springer via http://dx.doi.org/10.1007/s10551-013-1991-9In this paper we investigate whether, and how, corporate management strategically uses disclosure to manage the perceptions of different organizational audiences. In particular, we examine the interactions between the FIAT Group and three of its key organizational audiences—the local press, the international press, and the financial analysts, which are characterized by different levels of salience for the company. We focus on both how management reacts to the optimism level existing within each audience and how the narrative disclosure tone adopted by FIAT influences the ex-post optimism in the local and international press or in the financial analyst community. We investigate the disclosure of the FIAT Group over a 6-year period (2004–2009), during which 70 price-sensitive press releases were published. On the basis of 1,887 (331) news articles published in Italian (international) newspapers and 411 analyst reports, we report evidence of different strategic patterns in the interaction processes between FIAT and its audiences. Our findings also indicate some differences in the way FIAT is affected by, and in turn, affects the sentiment of each audience, thus highlighting that the salience of the stakeholder is an important driver of the adoption of impression management techniques. Taken together, our findings point to issues related to setting the “tone at the top” and potential ethical matters. Copyright Springer Science+Business Media Dordrecht 2015Italian Ministry of Research (MIUR

Impression management and organizational audiences: The Fiat Group case

Author's accepted manuscript. The final publication is available at Springer via http://dx.doi.org/10.1007/s10551-013-1991-9In this paper we investigate whether, and how, corporate management strategically uses disclosure to manage the perceptions of different organizational audiences. In particular, we examine the interactions between the FIAT Group and three of its key organizational audiences—the local press, the international press, and the financial analysts, which are characterized by different levels of salience for the company. We focus on both how management reacts to the optimism level existing within each audience and how the narrative disclosure tone adopted by FIAT influences the ex-post optimism in the local and international press or in the financial analyst community. We investigate the disclosure of the FIAT Group over a 6-year period (2004–2009), during which 70 price-sensitive press releases were published. On the basis of 1,887 (331) news articles published in Italian (international) newspapers and 411 analyst reports, we report evidence of different strategic patterns in the interaction processes between FIAT and its audiences. Our findings also indicate some differences in the way FIAT is affected by, and in turn, affects the sentiment of each audience, thus highlighting that the salience of the stakeholder is an important driver of the adoption of impression management techniques. Taken together, our findings point to issues related to setting the “tone at the top” and potential ethical matters. Copyright Springer Science+Business Media Dordrecht 2015Italian Ministry of Research (MIUR

Quantifying the Impact of Spatiotemporal Resolution on the Interpretation of Fluvial Geomorphic Feature Dynamics From Sentinel 2 Imagery: An Application on a Braided River Reach in Northern Italy

Machine learning algorithms applied on the publicly available Sentinel 2 images (S2) are opening the opportunity to automatically classify and monitor fluvial geomorphic feature (such as sediment bars or water channels) dynamics across scales. However, there are few analyses on the relative importance of S2 spatial versus temporal resolution in the context of geomorphic research. In a dynamic, braided reach of the Sesia River (Northern Italy), we thus analyzed how the inherent uncertainty associated with S2's spatial resolution (10 m pixel size) can impact the significance of the active channel (a combination of sediment and water) delineation, and how the S2's weekly temporal resolution can influence the interpretation of its evolutionary trajectory. A comparison with manually classified images at higher spatial resolutions (Planet: 3 m and orthophoto: 0.3 m) shows that the automatically classified water is ∼20% underestimated whereas sediments are ∼30% overestimated. These classification errors are smaller than the geomorphic changes detected in the 5 years analyzed, so the derived active channel trajectory can be considered robust. The comparison across resolutions also highlights that the yearly Planet‐ and S2‐derived active channel trajectory are analogous and they are both more effective in capturing the river geomorphic response after major flood events than the trajectory derived from sequential multiannual orthophotos. More analyses of this type, across different types of river could give insights on the transferability of the spatial uncertainty boundaries found as well as on the spatial and temporal resolution trade‐off needed for supporting different geomorphic analyses

The transcription factor Kruppel homolog 1 is linked to the juvenile hormone-dependent maturation of sexual behavior in the male moth, Agrotis ipsilon

In the male moth, Agrotis ipsilon, the behavioral response and neuronal sensitivity in the primary olfactory center, the antennal lobe (AL), to sex pheromone increase with age and juvenile hormone (JH) biosynthesis. Although JH has been shown to control this age-dependent plasticity, the underlying signaling pathway remains obscure. In this context, we cloned a full cDNA encoding the Kruppel homolog 1 transcription factor (AipsKr-h1) of A. ipsilon, which was found to be predominantly expressed in ALs, where its amount increased concomitantly with age and sex pheromone responses. Conversely, the expression of AipsKr-h1 protein in the antenna was age-independent. Moreover, the administration of JH in immature males or fluvastatin, an inhibitor of JH biosynthesis, in mature males induced an increase or a decline of the AipsKr-h1 protein level in ALs, respectively. This effect was suppressed with a combined injection of fluvastatin and JH. Our results showed that Aipskr-h1 is a JH-upregulated gene that might mediate JH action on central pheromone processing, modulating sexual behavior in A. ipsilon

Synaptotagmin I, a molecular target for steroid hormone signaling controlling the maturation of sexual behavior in an insect

As in vertebrates, the insect steroid hormones, especially 20-hydroxyecdysone (20E), initiate and regulate sexual behavior by acting on the central nervous system. This 20E action is, in part, triggered by transcriptional events mediated through the binding of 20E to a heterodimer comprising the ecdysone receptor (EcR) and ultraspiracle (USP). However, to date, our knowledge about this genomic steroid pathway remains incomplete. In moths, males detect female sex pheromones, eliciting stereotyped sexual behavior. In Agrotis ipsilon males, the behavioral response and the neuronal sensitivity to sex pheromone in the olfactory center, the antennal lobe (AL), increase with age. We recently showed that 20E controlled this age-dependent olfactory plasticity via the activation of an EcR/USP-dependent pathway in the AL. Here, we cloned the gene encoding A. ipsilon synaptotagmin I (AisytI), a presynaptic vesicle protein known to act as a calcium sensor in neurotransmitter release. AisytI was expressed in the AL, where its amount increased with age, whereas its knockdown inhibited the sex pheromone-oriented flight of males. 20E administration to males induced AL AisytI expression in a dose-dependent and time-dependent manner. Moreover, A. ipsilon EcR silencing caused decreases in AL AisytI expression and the behavioral response to sex pheromone. Our results show that the synaptotagmin I gene is a target gene for the genomic steroid signaling that controls the expression of insect sexual behavior by acting on central sex pheromone processing. This study thus represents a significant advance in our understanding of the steroid actions that influence neural functions, and thereby behavioral plasticity, in various organisms