Chika Saka

Disclosure effects, carbon emissions and corporate value

Purpose – The main purpose of this study is to examine the impact of corporate carbon emissions and disclosure on corporate value, especially regarding whether disclosure helps to reduce uncertainty in valuation as predicted by carbon emissions using a unique data set on Japanese companies. Design/methodology/approach – Empirical analysis of the relations between corporate carbon emissions using compulsory filing data to Japanese Government covering more than 1,000 firms, corporate carbon management disclosure (CDP disclosure), and the market value of equity. Findings – The authors find that corporate carbon emissions have a negative relation with the market value of equity, the disclosure of carbon management has a positive relation with the market value of equity, and the positive relation between the disclosure of carbon management and the market value of equity is stronger with a larger volume of carbon emissions. Practical implications – The results may be important when considering the inclusion of ...

The Effects of Stakeholders on CSR Disclosure: Evidence from Japan

This paper examined the effects of stakeholders on firms’ CSR information disclosures. In Japan, many firms voluntarily disclose CSR information, with disclosure practices varying across firms. This paper quantified the CSR information released by 236 Japanese listed firms and examined the relationship between CSR information disclosures and the information needs of firm stakeholders. The results revealed that (1) the information needs of external stakeholders, including governments, creditors, consumers and local residents induced firms to disclose CSR information, (2) internal stakeholders have no effects on CSR information disclosure, and (3) CSR advocacy groups as intermediary stakeholders exerted a positive effect on CSR disclosure. The results suggest different relationship between CSR information disclosures and stakeholders’ information needs by CSR categories. These findings also reinforce the suggestion that the different stakeholder types (internal, external, and intermediary) have dissimilar CSR information needs. This research would contribute to our understanding of the effect of stakeholders on firms’ CSR information disclosure more inclusively.

Sustainability KPIs for integrated reporting

Integrated reporting shows a panoramic view of the firm’s status. IIRC’s framework is principles-based, it does not provide specific key performance indicators (KPIs) for integrated thinking and reporting. Through empirical analyses of all listed firms in 34 countries, our study provides the first evidence that value added information is actually useful for evaluating the firm’s financial stability and sustainability. We focus on firms that have survived for more than 100 years and that have already achieve sustainability. We find two distinguishing facts; the value added distributed to stakeholders other than shareholders is significantly larger and the stability of profitability is significantly higher in sustainable firms. These two KPIs are equivalent to the two interrelated aspects of value under the IIRC framework. We therefore propose the value added distribution and the stability of profitability as a sustainability KPIs for integrated reporting. Keyword Created Value, Integrated Reporting, Sustainability

Visualization of World-Scale Evidence on Tax Avoidance and Tax Rate Convergence

Purpose Firm tax avoidance has gathered substantial public attention in both practice and academic literature. We study tax avoidance among firms and countries using the visualization of accounting data of all of listed firms from 148 countries from 1985 to 2015. Design/methodology/approach Over 30 years of financial data on all listed firms from 148 countries and provides world-scale evidence on tax avoidance and tax rates convergence. The research design uses exploratory data analysis and reproducible research using data visualization tools, namely, R with dplyr, ggplot2, and googleVis (Geo Chart and Motion Chart). Findings We provide world-scale evidence on (1) firms’ tax avoidance, showing a non-random distribution of firms’ effective tax rates and return on assets using visualization from 1985 to 2015, and (2) downward convergence trend of firms’ effective and statutory tax rates among 58 countries over the past 20 years. Originality/Value This study makes two key contributions to the literature. First, this is the first to provide world-scale evidences on the tax avoidance and convergence trends of tax rates. Second, we use the visualization method, which allows easily understanding of what is happening around the world. Research Implications Our results highlight the tax avoidance issue, which can no longer be ignored, and facilitate a collaborative discussion between non-specialists and professionals with objective evidence from visualization.

Visualization and Statistical Modeling of Financial Big Data: Log-Linear Modeling With Skew Error

In this paper, we consider the visualization and statistical modeling of financial data (e.g., sales, assets) for many global firms which are listed and delisted. This study presents an exploratory data analysis carried out in the R programming language. The results show that a log-linear model with skew-t error is useful for modeling the total sales volume (in thousands of U.S. dollars) as a function of the number of employees and the total assets (in thousands of U.S. dollars), and is obtained by comparing the Akaike information criteria between several log-linear models with error terms which are independent and identically distributed random variables with skew distributions. These models are also evaluated by cross-validation.

The Value Relevance of the Recognition of Soil Remediation Costs AndLiabilities: Evidence from Japan

This is the first paper to examine the value relevance of soil contamination risk, and the recognition of site clean-up costs and liabilities on the financial statements of Japanese firms. Soil contamination is one of the primary environmental issues confronting Japan in terms of the massive clean-up costs involved. Although Japanese firms are not required to clean-up compulsory unlike US, many firms implement site clean-up activities voluntarily. These actions are against common perception “clean-up doesn’t pay”. Our research provides the evidence that “site clean-up pays” under conditions of accounting recognition. We estimate firm’s soil contamination risk using Pollutant Release and Transfer Register data and examine the relation between the risk and corporate market values. Next, we investigate the impact of corporate activity aimed at preventing soil contamination risk. We also examine whether the recognition of site clean-up costs and liabilities in the firm’s financial statements alleviate the purported negative impact of soil contamination risk on market value. Our market value analysis generates three main findings. First, firm’s soil contamination risk has a negative impact on market value. Second, corporate activity regarding the prevention of soil contamination risk has a positive impact on market value. Finally, the recognition of site clean-up costs and liabilities on financial statements helps alleviate the purported negative impact of soil contamination risk on market value. An important consideration is that we revealed these findings under the unique regulatory environment operating in Japan, one mainly based on corporate voluntary action. This suggests that the market values firm’s clean-up not from any compulsory requirement, but rather from the perspective of voluntary prevention activity, and that the recognition of clean-up costs and liabilities substantially offset any downward valuation from soil contamination risk. We thus assert that the stigma of soil contamination exists, and that prevention of pollution and the recognition of site clean-up costs and liabilities help reduce the stigma for firms and that “clean-up pays.”