Top PDF “We Believe”: Omnicare, Legal Risk Disclosure and Corporate Governance

“We Believe”: Omnicare, Legal Risk Disclosure and Corporate Governance

“We Believe”: Omnicare, Legal Risk Disclosure and Corporate Governance

In Omnicare, the Supreme Court addressed one of the more complicated areas of securities fraud: statements of opinion and belief in the context of omissions or “half-truths.” An omission is not a statement. It is the absence of a statement or fact, and that absence is one of the key aspects of the Supreme Court’s opinion in Omnicare. Determining when a statement of opinion or belief requires more information or factual clarification so that it is not misleading is important because that omission will then support a claim for securities fraud. For this Article’s purposes, however, the “absence” of the information is also important because it can define the content of the corporate fiduciaries’ duties. That is the issue on which this Article focuses: the interplay between securities and corporate law in the context of the board of directors and its role in the oversight and risk- management decisions that form the bounds for business choices and compliance. Or, put differently, how the decisions of board fiduciaries with respect to the exercise of their duties might be influenced by the need to disclose information about those decisions and choices.
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Relationship between Corporate Governance Practices and Firms Performance of Indian Context

Relationship between Corporate Governance Practices and Firms Performance of Indian Context

Ownership structure of the Indian firms is characterized with family ownership, block holdings and business groups. Poor law enforcement, corruption, weak legislative and regulatory framework and poor implementation of the property rights are the main causes for the concentrated ownership in India, which further results in agency problems. Weak legal protection of property rights in emerging markets discourages informed arbitragers to capitalize on firm-specific information (Morck et al., 2000). Botosan (1997) states that “Although the annual report is only one means of corporate reporting, it should serve as a good proxy for the level of voluntary disclosure provided by a firm across all disclosure avenues. Despite considerable regulatory effort and theoretical and empirical research on fair disclosure, it is still a debatable question of: to disclose or not to disclose. For instance, the effect of disclosure on the cost of capital can be observed in two ways. Firstly, the greater the disclosure, the lower will be the cost of equity capital. Secondly, increased disclosure will enhance the share price volatility, which will further result in higher risk and cost of capital.
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Corporate governance, risk disclosure and cost of equity capital in the Malaysian public listed firms

Corporate governance, risk disclosure and cost of equity capital in the Malaysian public listed firms

12 The corporate reporting community has always been curious regarding whether the greater the level of disclosure of a company would result is a lower cost of equity for the firm. However this issue has been much debated upon (Botosan, 1997; Sossie and Khalif, 2001). The theoretical discussions state that greater disclosure is related to lower cost of equity because of the reduced estimation risk and lowered transaction costs. The ICAEW also supports full disclosure, as they believe that a company that discloses risk information will create a brand image of them being riskier than prior to disclosure. The disclosure of risk motivates its management and decreases the volatility of the stock; hence, reducing the firm’s cost of capital. The reporting of risk information is crucial especially for potential investors. The more aware they are of the potential risks, the better they would be able to attach value and determine the cost of capital for the firm. However, as a drawback, this theory does not have sufficient empirical evidence to substantiate it. For instance, the Jenkins committee notes that the greatest benefit of risk disclosure is the reduced cost of capital (AICPA, 1994). On the other hand, the financial executive institute (Berton, 1994; Botosan, 1997) stated that increased disclosure would target the stock traders hence, increasing the volatility of the share price and as a result increasing risk which results in higher equity capital cost.
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The Effect Of Corporate Governance  On Unfaithful Disclosure Designation  And Unfaithful Disclosure Penalty Points

The Effect Of Corporate Governance On Unfaithful Disclosure Designation And Unfaithful Disclosure Penalty Points

In general, good corporate governance plays an effective role in monitoring and supervising management actions; this leads to better decision making by the management, and information risks faced by shareholders and agency costs are consequently mitigated (Ashbaugh, Collins & LaFond, 2006; Byun, Kwak & Hwang, 2008). In the Korean business community, however, concerns have been raised that the outside director system and foreign ownership, the most common forms of corporate governance, have not been effective enough to monitor management actions. Unlike some financially advanced countries, Korea established corporate governance in a relatively short period of time as a mechanism to cope with external factors; creating a regulatory framework was the main concern, so companies do not always feel the intended benefit of adopting corporate governance. In addition, in Korea, outside directors are mostly appointed on the recommendation of the majority shareholder or incumbent managers, making the outside director system less independent and less capable (Lee, Park, & Choi 2001). In terms of foreign investment, some foreign investors’ extreme profiteering has been frowned upon, i.e., foreign investors ask for higher dividends by taking advantage of their right as a large shareholder, and focus on short-term profit harvesting and predatory investment strategy. As such, we believed an empirical analysis would help us understand whether corporate governance prevents unfaithful disclosure by monitoring managers’ opportunistic considerations and ulterior motives and capturing errors in financial disclosure. In our empirical analysis, we used the proportion of outside directors, the percentage of foreign ownership and that of managerial ownership as proxy variables; using such variables, we explored whether corporate governance has a positive or negative influence on UDC designation and imposition of penalty points. Prior studies have been limited to explaining the relationship between corporate governance and the level of disclosure, measured by the frequency of disclosure, due to data insufficiency; our work takes a more detailed look, with our focus on explaining the relationship between corporate governance and UDC designation and accumulated penalty points.
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Impact of Corporate Governance on financial performance of companies – A study with reference to select corporate sectors

Impact of Corporate Governance on financial performance of companies – A study with reference to select corporate sectors

Corporate governance (CG) is the new buzz-word and invited much public attention in today’s corporate world. Corporate governance also gained further momentum after the sudden crash of Enron(2001), Xerox (2000), WorldCom (2002), Parmalat in Italy,Dawoo in Korea, Lehman Brothers (2008) followed by IT giant Satyam (2009). Lack of transparency and poor disclosures in the annual reports are blocking the shareholders from ascertaining the well-being of the corporate houses. In many respects, corporate governance should be viewed by investors as a component of equity risk (Deutsche Bank report, 2004). Furthermore, it can be argued that corporate governance is particularly relevant in developing economies, where the injection of foreign investment is essential to economic growth. Today, shareholders are more vigilant about their rights. This has made it more important for the companies to disclose the various parameters in their Annual Reports depending upon the model of corporate disclosure being followed by legal authority. Various researches have been conducted to investigate the relationship between corporate governance and financial performance, but the results have been mixed and inconclusive. In this paper, we examine and analyze the impact of corporate governance on financial performance of firm in an Indian context.
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Corporate Governance, Voluntary Disclosure, And Firm Information Environment

Corporate Governance, Voluntary Disclosure, And Firm Information Environment

This study sheds further light on the role of corporate governance and voluntary disclosure in shaping the firm information environment. Our empirical analysis uses non-parametric B-convexity methodology on a sample of 70 French listed firms belonging to the SBF120 index. The findings of the B-convexity approach show that 68.57% of sample firms are efficient (48 firms). Corporate governance mechanisms, such as boards of directors and disclosure policy, appear to effectively monitor the top executives of these firms, which reduces information asymmetry between insiders and outsiders. Such firms disclose more voluntary information needed by various stakeholders to assess firm performance and to make sound decisions, which in turn improves their information environment. The remaining 22 firms have efficiency scores different than 1, suggesting that they lie below the efficiency frontier. Ownership structure, board characteristics, and voluntary disclosure of these firms appears to lead to higher information asymmetry, lower analyst forecast accuracy, and higher stock return volatility, resulting in a more opaque information environment. These findings suggest that there is room to improve the quality of the information environment of SBF120 firms.
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Disclosure of Corporate Governance Practices in Indian Tourism Companies

Disclosure of Corporate Governance Practices in Indian Tourism Companies

The Indian tourism industry has emerged as one of the main engines of growth among the service sector in India. Tourism in India has great potential given the rich cultural and historical heritage, ecology, terrain and natural beauty places all over the country. Tourism is also a potential employment generator as well as being an important source of foreign currency for the country (Ambili, 2018; Charles, 2016; IBEF, 2018; India, 2016). Bremer & Elias, (2007) attracted consideration regarding low corporate governance in developing and transnational economies. Macmillan & Downing, (1999) defined the corporate governance as ‘the mechanisms by which companies are controlled and directed’. Most research concentrated on the function of corporate governance mechanisms in how firms can manage and perform (S. N. Abdullah & Nasir, 2004; Al-Shammari & Al-Sultan, 2009; Nikos Vafeas & Theodorou, 1998), however, some of the research on the relationship of governance to firm financial reporting is rare. Many of researchers have loyal more awareness recently to the impact of corporate governance on voluntary disclosure. Nevertheless, the concentrate has been in general on US, UK, Australian and European firms, with some of the studies on large emerging economies (Cheng & Courtenay, 2006; Forker, 1992).
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Corporate Governance and Voluntary Disclosure: Evidence from Jordan

Corporate Governance and Voluntary Disclosure: Evidence from Jordan

Board size is a significant corporate governance characteristic. Board size has a positive effect on the level of corporate voluntary disclosure (Samaha et al., 2012; Nadndi and Ghosh, 2012 ; Hassan, 2013). Larger boards are more efficient for corporate performance since they have a wide range of collective experience and expertise that may assist in making better decisions. A large number of directors on the board can lower the likelihood of information asymmetry. The former research reveals that a large board may cause the company monitoring activities to become less efficient. Conversely, other studies suggest that the board’s monitoring abilities augment with the increase in the number of members on the board. (Cheng and Courtenay, 2006) state that there is no theory to suggest an association between board size and voluntary disclosure level, they tested their hypothesis and found no significant association, and thus, this relationship stays an empirical matter. Considering this controversy, this paper does not detail direction to the connection between board size and voluntary disclosure but it hypothesizes that:
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Corporate governance and financial information disclosure in developing coubtry

Corporate governance and financial information disclosure in developing coubtry

Therefore, different national and organizational cultures and the nature of management education have a major impact on the performance achieved from the imported accounting standards (Etemadi et al., 2009). According to Nobes and Parker (2008), such factors as external environment and culture, the legal system, providers of finance, taxation, profession, inflation, accidents and external influences have a greater bearing on the decision to adopt IFRS in a country. On the other hand, educational levels, economic growth, cultural membership, availability of capital market and degree of external economic openness have an impact on the adoption of IFRS by developing countries (Zeghal and Mhedhbi, 2006). The reason for concentrating on Iran is due to the call for increased foreign and domestic investment, according to many experts, the economy of Iran has many investment opportunities, particularly in its stock exchange (Chatterjee et al., 2010; Rahmani, 2014). Iran has made the development of non-oil exports a priority. The country has the advantage of a broad domestic industrial base, an educated and motivated workforce and geographical location, which gives it access to an estimated population of some 300 million people in Caspian markets, Persian Gulf states and countries further east. This has spawned a number of processing industries (Iran-Investment, 2016).
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Corporate Governance, Risk Management Disclosure, and Firm Performance: A Theoretical and Empirical Review Perspective

Corporate Governance, Risk Management Disclosure, and Firm Performance: A Theoretical and Empirical Review Perspective

Today’s business environment has been highly competitive and often volatile in nature due to frequent changes and rapid advancement in technology. However, the 2008 and 2009 global economic crisis alongside several financial scandals by the managements of Enron, WorldCom, and Parmalat have increased the interests of multiple stakeholders to the effectiveness of Corporate Governance (CG) in organizations (Kyereboah-Coleman, 2008; Benjamin, 2009; Gill and Mathur, 2011; Fallatah and Dickins, 2012; Marn and Romuald, 2012; Shahwan, 2015). In like manner, the International Monetary Fund (IMF) Report (2009) reports that the issue of corporate failures resulting from global financial crisis have become severe because it is related to financial institutions which are the Asian Economic and Financial Review
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Adefemi

Adefemi

Corporate disclosure has been considered as an essential practice to the economic development and growth of emerging economies (Al-Zarouni et al., 2015) The CG codes available in Africa are influenced by OECD principles of CG (1999, 2004), the Commonwealth Association for Corporate governance CAGG (1999) and the King Reports on CG in South Africa (1994, 2002). Nigeria is purposely chosen for this study because of its size amongst the Sub Saharan African countries and its massive influence on economic and political roles Sebaliknya, untuk pengembalian aset, laba atas ekuitas, dan laba per saham, hasil yang ditunjukan tidak signifikan. Secara keseluruhan, penelitian ini menemukan bahwa kepatuhan perusahaan terdaftar terhadap persyaratan Securities Exchange Commission (SEC) Disclosure memiliki pengaruh positif terhadap kinerja tata kelola perusahaan yang terdaftar di Bursa Efek Nigeria.
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THE QUALITY OF CORPORATE GOVERNANCE PRACTICES IN MANUFACTURING SECTOR IN INDIA - AN EMPIRICAL INVESTIGATION

THE QUALITY OF CORPORATE GOVERNANCE PRACTICES IN MANUFACTURING SECTOR IN INDIA - AN EMPIRICAL INVESTIGATION

the Corporate Governance score, the ninth point was about the disclosure of Remuneration Policy & Remuneration of Directors. The point was assigned a weight age of 2 on a scale of 100. The point was further equally divided into two points, (i) Disclosure of remuneration policy and (ii) Disclosure of remuneration to directors. All companies have sufficiently disclosed about remuneration to directors except. In the Corporate Governance score, the tenth point was about the code of conduct. The point was assigned a weightage of 2 on a scale of 100. The point was further equally divided into two points, (i) Information on Code of Conduct and (ii) Affirmation regarding compliance for code of conduct. It is observed that all the companies have sufficiently disclosed about both the above points. All 4 companies only 1 get expected score of 2. In the Corporate Governance score, the eleventh point is about the various Committees of the board. The point carries a weightage of 25 on a scale of 100. The sub classification of the point is as under. (i) Audit Committee 8 (ii) Remuneration Committee 6 (iii) Shareholders' / Investors Grievance Committee 5 (iv) Nomination Committee 2 (v) Other Committees 4. The Audit Committee is assigned a weightage of 8. It is observed that all companies have made sufficient disclosure about the audit committee. All companies have sufficiently disclosed committee charter and terms of reference. However, none of the companies have scored completely and none have published Audit Committee Report in the annual report. The Remuneration/Compensation Committee is assigned a weightage of 6. It is observed that all companies have formed the committee. They have also made sufficient disclosure. None of the companies have published Remuneration Committee Report in the annual report except. The Shareholders' / Investors Grievance Committee are assigned a weightage of 5. It is observed that all the sample companies have formed the committee. However, none of the companies have published information about the investors / shareholders’ survey (if conducted).
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A STUDY RELATES TO BUSINESS ETHICS AND CORPORATE GOVERNANCE

A STUDY RELATES TO BUSINESS ETHICS AND CORPORATE GOVERNANCE

reputation of having a good or credible corporate governance mechanism. Corporate governance can thus be defined as the basic duties and responsibilities of company board, and its managers aim to ensure that different stakeholders in the organization get their contractual dues on time. These stakeholders include employees, shareholders, lenders, banks and financial institutions, bond or debenture holders. They should also ensure periodically that each of them are discharging their duties and responsibilities truthfully and faithfully. This also pinpoints the need for some rating agency which may periodically rate the corporate governance of companies based on the actual ground reality.
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Reform of Corporate Governance in the EU. CEPS Policy Brief No. 38, October 2003

Reform of Corporate Governance in the EU. CEPS Policy Brief No. 38, October 2003

In the area of company law, progress has been limited. The most important reform measures have failed after decades of efforts at harmonisation. Overall, the more they tried to harmonise “corporate governance” the less successful they were. One major proposal intended to harmonise company structures in the, now abandoned, 5th Company Law Directive. Another proposal aimed at easing cross-border mergers of companies (10th company law directive). The most publicised harmonisation effort has been the establishment of uniform rules for takeovers across the EU. This proposal attempted to create a “level playing field” through proportionality between risk-bearing capital and control, and introduced the break-through rule. Once again, the efforts to harmonise corporate governance structures and control systems have been blocked by the member states, each pursuing its own interests. The only real progress was the agreement on the regulation for a European company statute (Societas Europea, SE) in October 2001, which can in fact be considered a 16 th company law regime in the EU (see Box 1).
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Disclosure Quality and Corporate Governance: Evidence from Iran

Disclosure Quality and Corporate Governance: Evidence from Iran

This study explores the relationship between disclosure quality and corporate governance in Tehran stock exchange (TSE). In this study, the mechanisms of corporate governance are consist of internal audit, ownership concentration, CEO duality, board independence, board size, board chairman independence, and chairman tenure. On the other hand, the measure of disclosure quality calculated by the Stock Exchange Organization (SEO) has been used as a proxy for disclosure quality. Using a sample of 83 accepted firms on Tehran Stock Exchange (TSE) over the period from 2005 to 2010, the results reveal that there is a significant and positive relationship disclosure quality and each of independent variables such as internal audit, ownership concentration, CEO duality, board independence, and chairman independence, but no association between disclosure quality and each of board size and chairman tenure.
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CORPORATE GOVERNANCE ATTRIBUTES AND THE LEVEL OF CORPORATE VOLUNTARY DISCLOSURES IN ANNUAL REPORTS: THE CASE OF ETHIOPIA

CORPORATE GOVERNANCE ATTRIBUTES AND THE LEVEL OF CORPORATE VOLUNTARY DISCLOSURES IN ANNUAL REPORTS: THE CASE OF ETHIOPIA

In Ethiopia, the financial reporting and disclosure of the FIs is made in accordance with the 1960 Commercial Code, proclamations issued by the government for doing business in the banking, insurance and other financial sectors, and different directives issued by the regulatory body, the National Bank of Ethiopia (NBE). As there are no secondary financial markets, Ethiopia does not have securities exchange commission or board. The banking business proclamation 591/2008 (as amended), provides power to the NBE, which is the central bank, to license, regulate and supervise the FIs operating in Ethiopia. In the contemporary Ethiopia, the concern of having good corporate governance in the financial sector is becoming the interest of many stakeholders. In this regard, the present study is designed to investigate whether there is a relationship between corporate governance attributes and voluntary disclosure in the FIs operating in the finance sector.
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On dimensions in corporate disclosure studies

On dimensions in corporate disclosure studies

The last two papers in this special issue focused on financial reporting issues in the sense of the International Financial Reporting Standard and Revenue Recognition in reporting. The study by Du and Whittington (2018) carried out an experimental investigation on US companies to examine the dimensional precision in uncertainty disclosures related to revenue recognition. The study address some of the concerns of the preparers and users of financial information from the annual reports following the issuance in May 2014, by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) of a converged standard on revenue recognition (see Accounting Standards Update (ASU) No. 2014-09 and IFRS 15). The new revenue recognition standard requires managers to evaluate the nature of uncertainty and assess the magnitude and likelihood of future reversal. Du and Whittington (2018) studied the effects of uncertainty disclosure on investors’ judgments. They conducted an experiment whereby they manipulated uncertainty dimension (outcome vs. probability) and (im) precision level (a point estimate vs. a range estimate) in the context of US listed companies. They found that participants were sensitive to features of uncertainty disclosure. They argued that their results imply that dimensional precision is an important component in uncertainty disclosure. Lastly, Nnadi Rubanov, and Oledinma (2018) examined the effect of IFRS on the performance of UK investment closed-end trust funds with domestic equity focus using Carhart’s Four-Factor model. Nnadi et al. (2018) found that on average UK investment trusts do not generate abnormal return and their performance are not persistent. They showed that the adoption of IFRS has a decreasing impact on the excess returns generated by UK investment trust.
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Corporate governance practice and its effects on efficient performance in transport SACCO: the case of Super Highway 45 SACCO in Nairobi City County, Kenya.

Corporate governance practice and its effects on efficient performance in transport SACCO: the case of Super Highway 45 SACCO in Nairobi City County, Kenya.

The objectives of the study were to investigate whether board size, composition and corporate disclosure which are attributes of corporate governance have effect on efficient performance[r]

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Impact of incentives to voluntarily disclose corporate governance information in annual reports: an empirical study of Malaysian publicly listed companies

Impact of incentives to voluntarily disclose corporate governance information in annual reports: an empirical study of Malaysian publicly listed companies

Despite several strengths of this research, a number of limitations require mentioning. The first limitation of this study is that findings are based on Malaysian companies which may limit the generalisability of results to other jurisdictions such as to developed countries. The population from which the sample is drawn was all listed companies on the Bursa Securities Malaysia Berhad (BSMB) in 2007. Companies listed on the BSMB were selected because of the wider availability of annual report information from databases used for this research. Therefore, results of this study may not be generalisable to smaller and non-listed companies. In addition, only those companies that have corporate governance quality data published by the Minority Shareholder Watchdog Group in its 2008 corporate governance survey report were included in the sample for the research. This is because there is no corporate governance quality data available for a large number of companies before 2007. Consequently, results may not be generalisable to companies‟ corporate governance quality data prior to 2007. Furthermore, 2007 was selected as the base year to avoid any effects of the global financial crisis which happened in year 2008. Some of these sample companies may no longer exist due to the financial crisis and results may be different after the crisis.
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EFFECT OF FINANCIAL PERFORMANCE ON VOLUNTARY DISCLOSURE OF LISTED FINANCIAL FIRMS IN NIGERIA

EFFECT OF FINANCIAL PERFORMANCE ON VOLUNTARY DISCLOSURE OF LISTED FINANCIAL FIRMS IN NIGERIA

Prior studies such as those of Agyei- Mensah, 2012, Jullobal & Sartmool 2013, Mohammed, 2013, Islam, Bhuiyan, & Tuhin, 2014, Mohammed, Salleh, Ismail & Chek, 2014, Edogiawerie & David, 2016, Umoren Isiavwe-Ogbari, & Morenike 2016, Cunha & Mendes, 2017) all found positive association between financial performance, and voluntary disclosure of companies. However, others such as (Richardson & Welker 2001, Hail, 2002, Kristandl & Bortis 2007) found a negative significant relationship between financial performance and voluntary disclosure of companies. However findings of the studies mentioned above are limited on the ground that the dependent variable voluntary disclosure is a dichotomous variable of 0 and 1 the appropriate statistical technique to use in analyzing the data collected should be logistic regression (probit or logit) and not ordinary least square regression as used by previous studies mentioned above. It is as a result of these gap identified in methodology adopted by previous studies mentioned above which these study intend to fill that motivated researcher to study the effect of financial performance on voluntary disclosure of listed financial institutions in Nigeria. This research determined the effect that financial performance of a company has on voluntary disclosures.
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