The quantity and quality of narrative disclosures in management reportsCNMV guide effect

  1. Álvaro Melón-Izco 1
  2. Francisco J. Ruiz-Cabestre 1
  3. Carmen Ruiz-Olalla 1
  1. 1 Universidad de La Rioja
    info

    Universidad de La Rioja

    Logroño, España

    ROR https://ror.org/0553yr311

Revista:
Revista española de financiación y contabilidad

ISSN: 0210-2412

Año de publicación: 2024

Volumen: 53

Número: 3

Páginas: 355-393

Tipo: Artículo

beta Ver similares en nube de resultados
DOI: 10.1080/02102412.2023.2283968 DIALNET GOOGLE SCHOLAR

Otras publicaciones en: Revista española de financiación y contabilidad

Resumen

This study examines how compliance with the CNMV Guide impacts narrative disclosures in listed companies' management reports from 2010 to 2016. Analyzing text and visual elements, we introduce a novel measure for visual content. Additionally, we create a quality indicator surpassing traditional methods to accurately assess disclosure quality.Examining consolidated management reports from 2010 to 2016, we track changes in the quantity and quality of narrative disclosures, their influencing factors, and interrelationships. Findings show significant increases in text and visual length, with visuals growing relative to text. Adherence to the CNMV guide positively impacts text quantity but not visual elements. Moreover, companies complying with the CNMV guide demonstrate higher information quality, effectively meeting stakeholders' needs. These results underscore the positive impact of the CNMV guide on narrative disclosures in listed companies. Our research contributes insights into disclosure dynamics and underscores the importance of adherence to reporting guidelines.

Información de financiación

Financiadores

Referencias bibliográficas

  • AICPA. (1994). Improving business reporting - a customer focus: Meeting the information needs of investors and creditors, comprehensive report of the special committee on financial reporting (the Jenkins report). American Institute of Certified Public Accountants.
  • Ajina, A., Laouiti, M., & Msolli, B. (2016). Guiding through the fog: Does annual report readability reveal earnings management? Research in International Business and Finance, 38(C), 509–516. https://doi.org/10.1016/j.ribaf.2016.07.021
  • Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277. https://doi.org/10.2307/2297968
  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304-4076(94)01642-D
  • Banegas, R., Manzaneque, M., & Priego, A. M. (2013). Informe anual de gobierno corporativo como fuente de transparencia empresarial. Especial referencia a las empresas cotizadas españolas. Revista de Contabilidad y Dirección, 16, 29–62.
  • Beattie, V. (2005). Moving the financial accounting research front forward: The UK contribution. The British Accounting Review, 37(1), 85–114. https://doi.org/10.1016/j.bar.2004.09.004
  • Beattie, V., & Davison, J. (2015). Accounting narratives: Storytelling, philosophising and quantification. Accounting and Business Research, 45(6–7), 655–660. https://doi.org/10.1080/00014788.2015.1081520
  • Beattie, V., Dhanani, A., & Jones, M. J. (2008). Investigating presentational change in U.K. anual reports: A longitudinal perspective. Journal of Business Communication, 45(2), 181–222. https://doi.org/10.1177/0021943607313993
  • Beattie, V., & Jones, M. (2008). Corporate reporting using graphs: A review and synthesis. Journal of Accounting Literature, 27, 71–110.
  • Beattie, V., McInnes, B., & Fearnley, S. (2004). A methodology for analysing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes. Accounting Forum, 28(3), 205–236. https://doi.org/10.1016/j.accfor.2004.07.001
  • Beattie, V., & Smith, S. J. (2013). Value creation and business models: Refocusing the intelectual capital debate. The British Accounting Review, 45(4), 243–254. https://doi.org/10.1016/j.bar.2013.06.001
  • Bell, E., & Davison, J. (2013). Visual management studies: Empirical and theoretical approaches. International Journal of Management Reviews, 15(2), 167–184. https://doi.org/10.1111/j.1468-2370.2012.00342.x
  • Ben-Rephael, A., Ronen, J., Ronen, T., & Zhou, M. J. (2021). Do Images Provide Relevant Information to Investors? An Exploratory Study. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3954219
  • Beretta, S., & Bozzolan, S. (2004). A framework for the analysis of firm risk communication. The International Journal of Accounting, 39(3), 265–288. https://doi.org/10.1016/j.intacc.2004.06.006
  • Besley, D. A., Kuh, E., & Welsch, R. E. (2013). Regression diagnostics: Identifying influential data and sources of collinearity. Wiley. https://doi.org/10.1002/jae.3950040108
  • Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143. https://doi.org/10.1016/S0304-4076(98)00009-8
  • Botosan, C. A. (1997). Disclosure level and the cost of equity capital. Accounting Review, 72(3). http://www.jstor.org/stable/248475
  • Botosan, C. A. (2004). Discussion of a framework for the analysis of firm risk communication. The International Journal of Accounting, 39(3), 289–295. https://doi.org/10.1016/j.intacc.2004.06.007
  • Bovens, G., & Schillemans, T. (2014). The Oxford Handbook of Public Accountability. Oxford University Press.
  • Cho, C. H. (2009). Legitimation strategies used in response to environmental disaster: A French Case study of total SA’s Erika and AZF Incidents. European Accounting Review, 18(1), 33–62. https://doi.org/10.1080/09638180802579616
  • CICA. (1991). Information to be included in the annual report to shareholders. Canadian Institute of Chartered Accountants.
  • CNMV. (2013). Guía para la elaboración del informe de gestión de las entidades cotizadas. CNMV.
  • Darnall, N., Ji, H., Iwata, K., & Arimura, T. H. (2022). Do ESG reporting guidelines and verifications enhance firms’ information disclosure? Corporate Social Responsibility and Environmental Management, 29(5), 1214–1230. https://doi.org/10.1002/csr.2265
  • Da Silva Monteiro, S. M., & Aibar-Guzmán, B. (2010). Determinants of environmental disclosure in the annual reports of large companies operating in Portugal. Corporate Social Responsibility and Environmental Management, 17(4), 185–204. https://doi.org/10.1002/csr.197
  • Davison, J. (2015). Visualising accounting: An interdisciplinary review and synthesis. Accounting and Business Research, 45(2), 121–165. https://doi.org/10.1080/00014788.2014.987203
  • Deloitte. (2008). Write from the start. Surveying narrative reporting in annual reports. Deloitte and Touche LLP.
  • Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: Social values and organizational behavior. The Pacific Sociological Review, 18(1), 122–136. https://doi.org/10.2307/1388226
  • Firer, S., & Williams, S. M. (2005). Firm ownership structure and intellectual capital disclosures. South African Journal of Accounting Research, 19(1), 1–18. https://doi.org/10.1080/10291954.2005.11435116
  • Gisbert, A., Navallas, B., & Romero, D. (2014). Proprietary costs, governance and the segment disclosure decision. Journal of Management & Governance, 18(3), 733–763. https://doi.org/10.1007/s10997-012-9243-4
  • Guthrie, J. (1982). Social Accounting in Australia: Social Responsibility disclosure in the Top 150 listed Australian companies 1980 annual reports. W.A.I.T.
  • Guthrie, J., Petty, R., Yongvanich, K., & Ricceri, F. (2004). Using content analysis as a research method to inquire into intellectual capital reporting. Journal of Intellectual Capital, 5(2), 282–293. https://doi.org/10.1108/14691930410533704
  • Hasseldine, J., Salama, A. I., & Toms, J. S. (2005). Quantity versus quality: The impact of environmental disclosures on the reputations of UK plcs. The British Accounting Review, 37(2), 231–248. https://doi.org/10.1016/j.bar.2004.10.003
  • Havemo, E. (2018). Visual trends in the annual report: The case of Ericsson 1947-2016. Corporate Communications: An International Journal, 23(3), 312–325. https://doi.org/10.1108/CCIJ-03-2017-0015
  • Hooks, J., & Van Staden, C. J. (2011). Evaluating environmental disclosures: The relationship between quality and extent measures. The British Accounting Review, 43(3), 200–213. https://doi.org/10.1016/j.bar.2011.06.005
  • Hopwood, A. G. (2007). Whither accounting research? The Accounting Review, 82(5), 1365–1374. https://doi.org/10.2308/accr.2007.82.5.1365
  • IASB. (2006). Preliminary views on an improved conceptual framework for financial reporting: The objective of financial reporting and qualitative characteristics of decision-useful financial reporting information.
  • IASB. (2010). Management Commentary. A framework for presentation. International Accounting Standards Board (IASB).
  • IOSCO. (2003). General Principles Regarding disclosure of management’s Discussion and analysis of financial condition and results of operations. International Organization of Securities Commissions (IOSCO).
  • Joseph, C., & Taplin, R. (2011). The measurement of sustainability disclosure: Abundance versus occurrence. Accounting Forum, 35(1), 19–31. https://doi.org/10.1016/j.accfor.2010.11.002
  • Kutner, M. H., Nachtsheim, C. J., Neter, J., & Li, W. (2005). Applied linear statistical models (Fifth Edit ed.). McGraw-Hill. https://doi.org/10.1080/00224065.1997.11979760
  • Lee, T. (1994). The CHANGING FORM of the CORPORATE ANNUAL REPORT. Accounting Historians Journal, 21(1), 215–232. https://doi.org/10.2308/0148-4184.21.1.215
  • Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, 45(2–3), 221–247. https://doi.org/10.1016/j.jacceco.2008.02.003
  • McMillan, S. J. (2000). The microscope and the moving target: The challenge of applying content analysis to the World wide Web. Journalism & Mass Communication Quarterly, 77(1), 80–98. https://doi.org/10.1177/107769900007700107
  • Meyer, J. W., & Rowan, B. (1991). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363. https://doi.org/10.1086/226550
  • Michelon, G., Pilonato, S., Ricceri, F., & Roberts, R. W. (2016). Behind camouflaging: Traditional and innovative theoretical perspectives. Sustainability Accounting, Management and Policy Journal, 7(1), 2–25. https://doi.org/10.1108/SAMPJ-12-2015-0121
  • Milne, M. J., & Adler, R. (1999). Exploring the reliability of social and environmental disclosures content analysis. Accounting Auditing & Accountability Journal, 12(2), 237–256. https://doi.org/10.1108/09513579910270138
  • Nielsen, C. (2008). A content analysis of analyst research: Health care through the eyes of analysts. Journal of Health Care Finance, 34(3), 66–90.
  • Powel, W. W., & DiMaggio, P. (1991). The New Institutionalism in organizational analysis. University of Chicago Press.
  • PricewaterhouseCoopers. (2007a). Business Review : has it made a difference?
  • PricewaterhouseCoopers. (2007b). Corporate reporting – a time for reflection A survey of the Fortune Global 500 companies’ narrative reporting.
  • Robb, S. W. G., Single, L. E., & Zarzeski, M. T. (2001). Nonfinancial disclosures across Anglo-American countries. Journal of International Accounting, Auditing & Taxation, 10(1), 71–83. https://doi.org/10.1016/S1061-9518(01)00036-2
  • Rutherford, B. A. (2003). Obfuscation, textual complexity and the role of regulated narrative accounting disclosure in corporate governance. Journal of Management & Governance, 7(2), 187–210. https://doi.org/10.1023/A:1023647615279
  • Seah, S., & Tarca, A. (2013). An investigation of the International comparability of management Commentary reports. SSRN ELibrary, August. https://doi.org/10.2139/ssrn.962628
  • SEC. (1998). A plain English handbook. How to create clear SEC. U.S. Securities and Exchange Commission (SEC).
  • Smith, M., & Taffler, R. J. (2000). The chairman’s statement - a content analysis of discretionary narrative disclosures. Accounting Auditing & Accountability Journal, 13(5), 624–647. https://doi.org/10.1108/09513570010353738
  • SRI International. (1987). Investor information needs and the annual report. Financial Executives Research Foundation.
  • Suárez, Ó., & Babío, M.-R. (2014). La necesidad de mejorar la claridad de la información narrativa. Revista de La Asociación Española de Contabilidad y Administración de Empresas, 106, 14–16.
  • Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. The Academy of Management Review, 20(3), 571–610. https://doi.org/10.2307/258788
  • Tabachnick, B., & Fidell, L. (1996). Using multivariate statistics (3rd ed.). HarperCollins.
  • Tarca, A., & Seah, S. (2006). The impact of regulatory framework on management Commentary reports. SSRN, eLibrary. https://doi.org/10.2139/ssrn.962628
  • Trotman, K. T. (1979). Social Responsibility disclosures by Australian companies. Chartered Accountant in Australia, 49, 24–28.
  • Unerman, J. (2000). Methodological issues - reflections on quantification in corporate social reporting content analysis. Accounting Auditing & Accountability Journal, 13(5), 667–681. https://doi.org/10.1108/09513570010353756
  • Urquiza, F. B., Navarro, M. C. A., & Trombetta, M. (2010). Disclosure theories and disclosure measures. Revista Española de Financiacion y Contabilidad, 39(147), 393–415. https://doi.org/10.1080/02102412.2010.10779686
  • van Beest, F., Braam, G., & Boelens, S. (2009). Quality of financial reporting: Measuring qualitative characteristics. NiCE Working Paper 09-108, April, 1–41.
  • Vanstraelen, A., Zarzeski, M. T., & Robb, S. W. G. (2003). Corporate nonfinancial disclosure practices and financial Analyst forecast ability across three European countries. Journal of International Financial Management & Accounting, 14(3), 249–278. https://doi.org/10.1111/1467-646X.00098
  • Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51. https://doi.org/10.1016/j.jeconom.2004.02.005
  • You, H., & Zhang, X. J. (2009). Financial reporting complexity and investor underreaction to 10-k information. Review of Accounting Studies, 14(4), 559–586. https://doi.org/10.1007/s11142-008-9083-2
  • Zimmerman, M. A., & Zeitz, G. J. (2002). Beyond survival: Achieving new venture growth by building legitimacy. The Academy of Management Review, 27(3), 414–431. https://doi.org/10.2307/4134387