Determinants of strategy disclosure quality: empirical evidence from Germany
-
DOIhttp://dx.doi.org/10.21511/ppm.17(4).2019.09
-
Article InfoVolume 17 2019, Issue #4, pp. 104-120
- Cited by
- 1049 Views
-
224 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Strategy reporting is of high interest to investors and can be seen as decision-useful information. The focus of this study is to analyze the determinants of the quality of voluntary strategy disclosure in German management reports of capital market-oriented companies. Based on a theoretical analysis, hypotheses are formulated to investigate the determinants of the quality of voluntary strategy disclosure. In order to test the hypotheses, a number of statistical tests are performed, especially multiple regression analyses. It is based on a unique hand-collected dataset with a self-constructed scoring model, which measures the quality of voluntary strategy disclosure. The sample comprises 110 largest companies in Germany for the period between 2014 and 2018. The results indicate that firm size, firm growth and capital intensity determine voluntary strategy disclosure significantly and positively. Conversely, firm age, financial leverage, ownership structure and profitability do not have a significant relationship with voluntary strategy disclosure. The results are robust to different statistical analysis. This research provides insights into a neglected topic in academia and helps decision-makers in practice and regulators to better understand voluntary strategy disclosure of capital market-oriented companies.
- Keywords
-
JEL Classification (Paper profile tab)M10, L10
-
References53
-
Tables8
-
Figures0
-
- Table 1. Sample selection procedure
- Table 2. Descriptive statistics of metric variables
- Table 3. Pearson and spearman correlation matrix
- Table 4. Results of multiple regression models
- Table 5. Robustness check 1: regression models by year
- Table 6. Robustness check 2: regression models with different proxies for firm size without control variables
- Table 7. Robustness check 3: regression models with different proxies for firm size including control variables
- Table A1. Data collection instrument
-
- Abraham, S., & Tonks, I. (2006). Voluntary Corporate Disclosures by UK Companies (Unpublished manuscript). University of Exeter, UK.
- Agca, A., & Önder, S. (2007). Voluntary Disclosure in Turkey: A Study on Firms Listed in Istanbul Stock Exchange (ISE). Problems and Perspectives in Management, 5(3), 241-251.
- Ahmed, K. K., & Courtis, J. K. (1999). Associations between corporate characteristics and disclosure levels in annual reports: a meta-analysis. The British Accounting Review, 31(1), 35-61.
- Akerlof, G. A. (1970). The market for “lemons”: quality uncertainty and the market mechanism. Quarterly Journal of Economics, 84, 488-500.
- Botosan, C. A. (1997). Disclosure level and the cost of equity capital. The Accounting Review, 72(3), 323-349.
- Broberg, P., Torbjörn, T., & Collin, S.-O. (2010). What explains variation in voluntary disclosure? A study of the annual reports of corporations listed on the Stockholm Stock Exchange. Journal of Management and Governance, 14(4), 351-377.
- Bukh, N. P., Nielsen, C., Gormsen, P., & Mouritsen, J. (2005). Disclosure of information on intellectual capital in Danish IPO prospectuses. Accounting, Auditing & Accountability Journal, 18(6), 713-732.
- Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What Determines Corporate Transparency? Journal of Accounting Research, 42(2), 207-252.
- Camfferman, K., & Cooke, T. E. (2002). An Analysis of Disclosure in the Annual Reports of U.K. and Dutch Companies. Journal of International Accounting Research, 1(1), 3-30.
- Chow, C. W., & Wong-Boren, A. (1987). Voluntary Financial Disclosure by Mexican Corporations. The Accounting Review, 62(3), 533-541.
- Coebergh, H. (2011). Voluntary disclosure of corporate strategy: Determinants and outcomes. An empirical study into the risks and payoffs of communicating corporate strategy (Doctoral dissertation).
- Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences (2nd ed.). New York, Lawrence Erlbaum Associates.
- Cooke, T. E. (1989). Voluntary Corporate Disclosure by Swedish Companies. Journal of International Financial Management & Accounting, 1(2), 171-195.
- D’Amico, E., Coluccia, D., Fontana, S., & Solimene, S. (2016). Factors Influencing Corporate Environmental Disclosure. Business Strategy and the Environment, 25(3), 178-192.
- Duran, I., & Rodrigo, P. (2018). Why Do Firms in Emerging Markets Report? A Stakeholder Theory Approach to Study the Determinants of Non-Financial Disclosure in Latin America. Sustainability, 10(9), 3111.
- Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. Academy of Management Review, 14(1), 57-74.
- Ferreira, D. & Rezende, M. (2007). Corporate strategy and information disclosure. RAND Journal of Economics, 38(1), 164-184.
- Francis, J. R., Khurana, I. K., & Pereira, R. (2005). Disclosure Incentives and Effects on Cost of Capital around the World. The Accounting Review, 80(4), 1125-1162.
- Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), 3-73.
- Gray, S. J., Meek, G. K., & Roberts, C. B. (1995). International Capital Market Pressures and Voluntary Annual Report Disclosures by U.S. and U.K. Multinationals. Journal of International Financial Management & Accounting, 6(1), 43-68.
- Gul, F. A., & Leung, S. (2004). Board leadership, outside directors’ expertise and voluntary corporate disclosures. Journal of Accounting and Public Policy, 23(5), 351-379.
- Haniffa, R. M., & Cooke, T. E. (2002). Culture, Corporate Governance and Disclosure in Malaysian Corporations. ABACUS, 38(3), 317-349.
- Hashim, M. H., Nawawi, A., & Salin, A. S. A. P. (2014). Determinants of strategic information disclosure – Malaysian evidence. International Journal of Business and Society, 15(3), 547-572.
- Healy, P. M., & Palepu, K. G. (2001). Information Asymmetry, Corporate Disclosure and the Capital Markets: A Review of the Empirical Disclosure Literature. Journal of Accounting and Economics, 31(1-3), 405-440.
- Hope, O.-K. (2003). Disclosure Practices, Enforcement of Accounting Standards and Analysts’ Forecast Accuracy: An International Study. Journal of Accounting Research, 41(2), 235-272.
- Hossain, M., Ahmed, K., & Godfrey, J. M. (2005). Investment Opportunity Set and Voluntary Disclosure of Prospective Information: A Simultaneous Equations Approach. Journal of Business Finance & Accounting, 32(5-6), 871-907.
- International Monetary Fund (2018). World Economic Outlook: Challenges to Steady Growth.
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
- Jones, D. A. (2007). Voluntary disclosure in R&D-intensive industries. Contemporary Accounting Research, 24(2), 489-522.
- Lang, M., & Lundholm, R. (1993). Cross-Sectional Determinants of Analyst Ratings of Corporate Disclosures. Journal of Accounting Research, 31(2), 246-271.
- Lee, K.-H. (2017). Does Size Matter? Evaluating Corporate Environmental Disclosure in the Australian Mining and Metal Industry: A Combined Approach of Quantity and Quality Measurement. Business Strategy and the Environment, 26(2), 209-223.
- Li, J., Pike, R., & Haniffa, R. (2008). Intellectual capital disclosure and corporate governance structure in UK firms. Accounting and Business Research, 38(2), 137-159.
- Meek, G. K., Roberts, C. B., & Gray, S. J. (1995). Factors influencing voluntary annual report disclosures by U.S., U.K. and continental multinational corporations. Journal of International Business Studies, 26(3), 555-572.
- Morris, R. D., & Tronnes, P. C. (2018). The determinants of voluntary strategy disclosure: an international comparison. Accounting Research Journal, 31(3), 423-441.
- Padia, N. (2012). Disclosure of non-financial information on strategy in South African annual reports. African Journal of Business Management, 6(46), 11472-11479.
- Patelli, L., & Prencipe, A. (2007). The Relationship between Voluntary Disclosure and Independent Directors in the Presence of a Dominant Shareholder. European Accounting Review, 16(1), 5-33.
- Porter, M. E. (1980). Competitive Strategy. New York, US. The Free Press.
- Porter, M. E. (1997). Creating Tomorrow’s Advantages. In Rowan Gibson (Ed.), Rethinking the Future: Rethinking business, principles, competition, control & complexity, leadership, markets and the world (pp. 267-274). London, England. Nicholas Brealy Publishing.
- Prencipe, A. (2004). Proprietary costs and determinants of voluntary segment disclosure: evidence from Italian listed companies. European Accounting Review, 13(2), 319-340.
- Reverte, C. (2009). Determinants of Corporate Social Responsibility Disclosure Ratings by Spanish Listed Firms. Journal of Business Ethics, 88(2), 351-366.
- Robbins, S. P., & Coulter, M. (2016). Management (13th ed.). Harlow, England.
- Ross, S. A. (1973). The Economic Theory of Agency: The Principal’s Problem. The American Economic Review, 63(2), 134-139.
- Santema, S., & van de Rijt, J. (2001). Strategy Disclosure in Dutch Annual Reports. European Management Journal, 19(1), 101-108.
- Santema, S., Hoekert, M., van de Rijt, J., & van Oijen, A. (2005). Strategy disclosure in annual reports across Europe: a study on differences between five countries. European Business Review, 17(4), 352-366.
- Shapiro, S. S. & Wilk, M. B. (1965). An Analysis of Variance Test for Normality (Complete Samples). Biometrika, 52(3/4), 591-611.
- Sieber, T. (2011). Strategieorientierte Berichterstattung im Lagebericht. Eine empirische Untersuchung börsennotierter Unternehmen in Deutschland (Doctoral dissertation). Frankfurt am Main, Germany. Peter Lang GmbH.
- Sieber, T., Weibenberger, B. A., Oberdörster, T., & Baetge, J. (2014). Let’s talk strategy: the impact of voluntary strategy disclosure on the cost of equity capital. Business Research, 7(2), 263-312.
- Singhvi, S. S., & Desai, H. B. (1971). An Empirical Analysis of the Quality of Corporate Financial Disclosure. The Accounting Review, 46(1), 129-138.
- Spence, M. (2002). Signaling in Retrospect and the Informational Structure of Markets. The American Economic Review, 92(3), 434-459.
- Ungerer, M., & Vorster, S. (2015). Strategy disclosure reporting trends in South Africa: A 2010–2011 comparative analysis for six industry clusters. Southern African Business Review, 19(3), 78-101.
- Ungerer, M. (2013). A comparative analysis of strategy disclosure reporting trends in South Africa in 2010. Southern African Business Review, 17(3), 27-56.
- Wallace, O. R. S., Naser, K., & Mora, A. (1994). The Relationship Between the Comprehensiveness of Corporate Annual Reports and Firm Characteristics in Spain. Accounting and Business Research, 25(97), 41-53.
- Welge, M. K., & Al-Laham, A. (2012). Strategisches Management. Grundlagen – Prozess – Implementierung (6th ed.). Wiesbaden, Germany.
-
The determinants of firm financing structures across sectors: an evidence from Indonesian listed companies
Satriyo Budi Cahyono
,
Arvinder Singh Chawla
doi: http://dx.doi.org/10.21511/imfi.16(1).2019.08
Investment Management and Financial Innovations Volume 16, 2019 Issue #1 pp. 100-118 Views: 1816 Downloads: 154 TO CITE АНОТАЦІЯThe study investigates the impacts of firms-, industry-, and country-level covariates on the financing structure amongst the Indonesian listed companies. Using artificial nested testing procedure, the preferred models were selected that could illustrate the association between debt ratio and its determinants. By making use of the full sample, it was found that these three levels of determinants explain approximately 73% of leverage variations.
Further, the importance of these determinants on leverages across sectors is also investigated in this study. The sectoral behavior plays a crucial role as the firm- and sector-level covariates indicate more important variables than country-level covariates, which implies that the firm-level covariates become the main factors in firm financing structure determination.
The artificial nested testing procedure (F-test) was used choose the preferred models, which is suitable for each sector. The selection of models depends on the sectoral characteristics, which indirectly control the orientation and magnitude of relationships. Those three levels of determinants have different impacts on capital structure across sectors, which provides evidence that the sectoral behaviors indirectly tend to influence the association between determinants and firm financing pattern in the Indonesian context. -
Determinants of the credit risk in developing countries: a case of Kosovo banking sector
Banks and Bank Systems Volume 12, 2017 Issue #4 pp. 90-97 Views: 1544 Downloads: 386 TO CITE АНОТАЦІЯThe determinant of the credit risk of banks in a developing country have limited data to analyze and limited participation in literature. Determinants of credit risk are very important in order to define the non-performing loans (NPL) in Kosovo banking systems. Even though banking system in Kosovo is the newest in region, it is comparable with banking systems to all places in regions (Albania, Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, etc.).
The main purpose of this paper is to classify some factors that influence credit risk in commercial banks in Kosovo. The research includes seven commercial banks for the period 2006–2015. Data analysis and interpretation are processed with Statistical Program for Social Sciences SPSS v.19.0.
The effect of variations in the determinants of credit risk exposure is based on using a multivariate panel regression model. Our empirical results suggest that a significant relationship exists between credit risk and the following variables: Profitability (ROE and ROA), Inefficiency (IE), Loans to deposit ratio (LDR), Credit growth (CG) and Deposit rate (DR), while variables of Solvency (SR) and Credit rate (CR) are not statistically significant in terms of credit risk. -
Financial sustainability of the state pension system of Ukraine
Olena Horbunova , Viktoriia Kartseva , Nataliya Pedchenko 
,
Myroslav Ostapenko
doi: http://dx.doi.org/10.21511/imfi.15(2).2018.02
Investment Management and Financial Innovations Volume 15, 2018 Issue #2 pp. 17-28 Views: 1308 Downloads: 187 TO CITE АНОТАЦІЯThe financial situation of the Ukrainian pension system and the problems of its reforming play an important role in determining the general standard of living in the country. The institutional weaknesses in the financial management of the state pension system have led to an unbalanced budget of the Pension Fund of Ukraine and a low standard of living for pensioners. In order to identify the potential for building an effective system of pension insurance, it is necessary to study the modern aspects of financial provision of the Ukrainian pension system. The article defines the economic interrelations between the processes of forming the financial resources of the Pension Fund of Ukraine and the volume and structure of the gross domestic product. In view of this, the financial sustainability of the state pension system of Ukraine has been researched and the determinants of its stable functioning in the years 1999–2017 have been identified, which enables to influence the process of effective formation and use of pension resources and to identify the strategic directions of reforming the pension system.
