1,721,011 research outputs found
Disclosure, corporate governance and foreign share ownership on the Zimbabwe Stock Exchange
No full textWe investigate the association of foreign share ownership with firm-level disclosure and corporate governance structures in Zimbabwe, a developing country in Southern Africa. Our motivation for the study derives from the literature, which suggests that foreign investors: (1) generally have a preference for companies in which they are well informed and where their investments are more likely to be protected, and (2) avoid companies in developing countries because of weak corporate governance structures and low disclosure. Using data drawn from companies listed on the Zimbabwe Stock Exchange, we examine the effect of disclosure and corporate governance on foreign share ownership. We find that disclosure, proportion of non-executive directors, institutional share ownership and audit committee independence are all positively and significantly associated with foreign share ownership. Our results also demonstrate that market capitalization, return on equity and liquidity ratios are significantly associated with foreign share ownership. These results are consistent with the notion that foreign investors have a preference for companies with effective corporate governance structures, companies with less information asymmetry, as well as companies with healthy cash positions. The results have implications for policy-makers in developing countries in their endeavour to improve liquidity on stock markets through the participation of foreign investors. The results are also useful to managers in developing countries who are keen to increase the market value of their company, thereby reducing their cost of capita
Audit committees and voluntary external auditor involvement in UK interim reporting
No full textThe study investigates the relationship between audit committee characteristics and the decision to engage external auditors to review published interim reports. The motivation for the study derives from the consensus notion that the audit committee enhances the quality of financial reporting. Using interim reports of 258 UK listed companies published in the period 2001–2002, the results of logistic regression analyses show that the likelihood of engaging an external auditor to review interim reports increases with audit committee independence and financial expertise and decreases with share ownership by audit committee members. The results show that audit committee size and the number of audit committee meetings are not significantly associated with the decision to engage auditors in interim reporting. Taken overall, these findings suggest that an effective audit committee is associated with a review of interim reports by external auditors
Introduction
No full textThe focus of the first two papers in this volume is controls. Egbe, Tsamenyi and Sa’id investigate the operations of formal and informal controls in a multinational subsidiary in Nigeria using a case study approach. This involved semi-structured interviews, observation, document analyses and a focus group discussion. The paper concludes that formal internal controls such as budgets, performance evaluation and rewards and staff recruitment operate alongside informal internal controls including beliefs systems, values and existing norms. In particular the study reports that forms of informal controls such as trust were found to be important in the organisation where superiors in certain instances assigned responsibilities to members of their teams not on the basis of their abilities or skills but because the member could be trusted. Egbe, Tsamenyi and Sa’id conclude that such informal controls could have a controlling effect and influence the formal organisational controls. The findings have significant implications for understanding the design of management controls in LDCs in general, and Africa in particula
The influence of the business review on reporting key performance indicators in the UK media sector
No full textComplimentary Narrative Commentaries of Statutory Accounts in the Annual Reports of UK Listed Companies
Get PDFThis paper, for the first time, classifies narrative information into complementary and supplementary. For the purpose of the paper, complementary narrative information is defined as that information which refers to specific numbers presented in the statutory accounts (profit and loss and balance sheet). Non-specific narrative information is classified as supplementary. Having made the distinction and provided reasons for such a distinction the study investigates the extent of complementary narrative commentaries on numbers from the statutory accounts. The study also investigates which company-specific characteristics are associated with the extent of complementary narrative commentaries. An index consisting of 46 items which must be reported in the statutory accounts was used to measure the extent of complementary narrative commentaries in the annual reports of 170 listed UK companies. the findings suggest that, on average, the companies comment on 3909% of the numbers appearing in their statutory accounts. using the Ordinary Least Squares (OLS) regression model, the results indicate that company size, gearing, profitability, liquidity ratio, the presence of exceptional items, and substantial institutional investment are significantly associated with the extent of complementary narrative commentaries. However, auditory type, directors' share ownership, and the proportion of non-executive directors are not significantly associated with the extent of complementary narrative commentaries. The research has important implications for accounting regulators, users of annual reports and future research into the usefulness narrative information provided in annual reports
Board structure and supplementary commentary on the primary financial statements
Get PDFPurpose:
This research investigates the relationship between the extent and focus of supplementary narrative commentary (SNC) on amounts reported in the primary financial statements and board structure variables.
Design/Methodology/Approach:
The study uses the disclosure index methodology to measure the extent of SNC in annual reports of 167 FTSE 250 companies. Ordinary Least Squares (OLS) regression analysis is employed to examine the association between the extent and focus of SNC and board structure variables.
Findings:
The findings show that the extent of SNC on amounts reported in the primary financial statements is about 30%, suggesting that companies provide commentary on a small number of amounts reported in the financial statements. In terms of focus of SNC, companies provide greater SNC on amounts in the income statement relative to the balance sheet. The regression results indicate that the extent of SNC is negatively associated with board size, and positively associated with audit committee independence and financial expertise. Focus of SNC is negatively related to audit committee independence and finance expertise.
Originality/Value:
The research contributes to both the voluntary disclosure and impression management literature streams. The findings provide evidence of the extent and focus of SNC on amounts in the financial statements. They also demonstrate that board structure variables are related to the extent and focus of SNC on amounts in primary financial statements. These findings have implications for policy makers who have responsibilities for ensuring that users of annual reports receive adequate information to make decisions
Corporate compliance with non-mandatory statements of best practice: the case of the ASB statement on interim reports.
No full textNoThis paper contributes to our understanding of compliance with non-mandatory statements of best practice. Specifically, we examine the efficacy of agency-related mechanisms on the degree of disclosure compliance with the ASB Statement on interim reports. Using data drawn from a sample of 259 UK companies listed on the London Stock Exchange, we show that although overall disclosure compliance is high (74.5% of the items of information being disclosed), companies do not fully comply with the ASB Statement on interim reports. We employ an ordinary least square (OLS) regression model to establish whether selected company-specific and corporate governance characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance. Our results indicate that multiple listing, company size, interim dividend and new share issuance are positively associated with the degree of compliance. We also find that the degree of disclosure compliance is positively associated with auditor involvement, audit committee independence and audit committee financial expertise. These results have important implications for policy because they suggest that whilst agency-related mechanisms may motivate compliance with best practice non-mandatory statements, full compliance may be unattainable without regulations
Corporate boards, ownership structure and firm performance in an environment of severe political and economic crisis
No full textThis study examines the relationship between board and ownership structures and firm performance in an environment of severe political and economic crisis. Using panel data from the Zimbabwe Stock Exchange (ZSE) for the period 2000-2005, we split the period into prepresidential election period (2000-2002) (a relatively stable political and economic period) and post-presidential election period (2003-2005) (a hostile political and economic period) to capture the differences in the political and economic landscape. We find that board size, ownership concentration and executive directors’ share ownership increased whilst the proportion of nonexecutive directors reduced in the post-presidential election period. Employing a system Generalized Method of Moments (GMM) approach, we find that performance is positively related to board size and ownership concentration in the post- (but not in the pre-) presidential election period. The results also show that performance is negatively related to executive directors’ share ownership in the post-presidential election period, but positively related in the pre-presidential election period. The proportion of non-executive directors is negative and significant in both periods. These findings support the notion that the effects of board and ownership structures depend on the nature of the firm’s environment, and therefore have important implications for policy-makers
Financial reporting in hyperinflationary economies and the value relevance of accounting amounts: hard evidence from Zimbabwe
Get PDFWe examine the value relevance of inflation-adjusted (IA) and historical cost (HC) amounts in a hyperinflationary economy. Using a unique dataset drawn from annual reports of firms listed on the Zimbabwe Stock Exchange from 2000 to 2005, we find that both sets of amounts are value relevant but HC amounts are superior to IA amounts. We also show that inflation gains and losses provide incremental information content beyond that provided by the HC amounts and that the power of this incremental content model is equivalent to that of the HC model but superior to that of the IA model. Further analyses indicate that, in periods of relatively low inflation, HC amounts are more value relevant, while in periods of relatively high inflation, the two sets of amounts are equally value relevant. Finally, we show that HC amounts have a greater ability to predict future cash flows than IA amounts, which suggests that the superiority of their value relevance stems from this.</p
Determinants and consequences of attribution statements on corporate financial performance outcomes in the annual report. An empirical analysis of UK listed firms.
No full textThis thesis explores causal attribution statements on performance outcomes given
in annual reports of UK listed rms. The objectives are three-fold. First, it analyses
the nature and extent of attribution statements provided. Second, it explores
corporate governance factors and rm-speci c characteristics that are related to the
provision of attribution statements. Finally, it investigates the economic consequences
of providing attribution statements by examining their association with the rm's cost
of equity capital.
Using data drawn from a sample of 142 UK rms listed on the London Stock
Exchange, content analysis was used to measure the extent of attributions in the
annual reports for the year 2006. The results show that the volume of attribution
statement provision is generally low and variation across rms is low. Firms also show
a strong tendency to explain performance with internal rather than with external
reasons. The results from regression analysis show that the volume of attribution
statements and the space given to internal and external attribution statements is
associated with the proportion of non-executive directors, director share ownership,
audit committee size, market value, gearing, pro tability and new share issues.
With respect to the relationship between the attribution statements and the cost
of capital, the PEG model was employed to estimate the cost of equity capital. The
ndings indicate an association between attribution statement provision and the cost
of equity capital, but only for rms with low analyst following. For these rms,
more extensive performance explanations and more extensive internal explanations
are associated with a higher cost of equity capital. However, attribution statements
are unrelated to the cost of equity capital for rms with high analyst following.
The thesis makes two contributions in the area of attribution determinants. First,
it measures attribution provision with a measure that has not been previously applied
in the literature to measure attribution statements. Second, it provides evidence
on how rm-speci c characteristics and the rm's corporate governance mechanisms
in uence the extent and the type of performance explanations provided by rms.
The thesis makes four contributions regarding the e ect of attribution statements
on the cost of capital. First, it uses a quantitative approach to directly estimate the cost of capital e ects of attribution statements. Second, it provides evidence that the
association between attribution statements and the cost of equity capital is in uenced
by an interaction between attribution statements and analyst following. Third, the
thesis provides the rst evidence of the relationship between attribution statements
and the cost of equity capital in a UK setting. Fourth, it provides evidence that
the relationship between disclosure and the cost of equity capital is complex and is
in uenced by interactions between disclosure and information intermediaries
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