Emma García-Meca

The explanatory factors of intellectual capital disclosure to financial analysts

Abstract The objective of this paper is to assess the information dealing with intellectual capital that firms disclose in presentations to sell-side analysts and the influences on these disclosures. Analysis of a sample of 257 reports from listed Spanish companies for 2000–2001 shows differences in disclosure levels by categories of intellectual capital. Companies usually report information regarding strategy, customers, and processes; information about research, development, and innovation is less often reported to financial analysts. Larger companies disclose higher levels of intellectual capital information, frequently outside presentations conducted after quarterly, half-year, or annual results announcements.

Corporate Governance and Earnings Management: A Meta‐Analysis

The goal of this paper is to meta-analyze the results of 35 studies that examine the effect on earnings management of firms’ boards of directors and ownership structure.We examine whether differences in results are attributable to moderating effects related to the system of corporate governance, the measurement of the governance variable, or the particular specifications of discretionary accruals models. The findings show that the variation in the results of previous studies on CEO duality and audit committee independence are caused by sampling error. In addition, the measurement of dependent variable, discretionary accruals, and the corporate governance system moderate the association between earnings management and some corporate governance variables. The measurement of variables, especially discretionary accruals, influences the findings found in previous studies. The findings emphasize the need to explicitly consider the legal and institutional setting when one analyzes the effect of mechanisms of corporate governance on discretionary accruals. Future research should include matrix correlations, and consider detailed measures of earnings management and more attributes of boards of directors in order to facilitate research using meta-analysis. The results suggest that board independence, board size, and audit committee independence can improve investor confidence by constraining earnings management. Additional empirical evidence regarding refined measures of ownership and board, specifically board independence, would be very useful in gaining greater understanding of how the different approaches to these constructs influence earnings management.

A Meta-Analytic Vision of the Effect of Ownership Structure on Firm Performance

There is a considerable volume of research on the effects of ownership structure on firm performance. However, the empirical results in this field are often conflicting and inconsistent. A meta-analysis based on 33 studies allows an integration of the results on the association between insider ownership, ownership concentration and firm performance. The findings show that governance system, measurement of performance, and control for endogeneity moderate the effect of ownership on firm performance.

The Association of Board Independence and Ownership Concentration with Voluntary Disclosure: A Meta-analysis

In this paper we apply meta-analysis to a sample of 27 empirical studies to clarify the association of board independence and ownership concentration with voluntary disclosure. We examine whether variations in results are attributable to the differences in the corporate governance system, the investor protection rights and the measurement of the governance variables. The findings show that the positive association between board independence and voluntary disclosure only occurs in those countries with high investor protection rights. The findings emphasize the need to consider the legal and institutional setting explicitly when analysing the effect of corporate governance on voluntary disclosure.

Assessing the quality of disclosure on intangibles in the Spanish capital market

Purpose – The purpose of this study is to analyse the quality of disclosure on intangibles in presentations to analysts held by firms listed in the Spanish capital market. Given that quantification of the information provides a more precise and convincing message than qualitative disclosure, the information is measured by two indices, which are focused on the specificity of the disclosure.Design/methodology/approach – The reports of all presentations to financial analysts held by Spanish companies listed in the Madrid Stock Exchange are analysed during the year 2000 and 2001. The sample contains 257 reports.Findings – Briefly, the study finds that there are differences in the quality of the information reported to financial analysts in Spain, and that several factors, such as firm size and the levels of profitability and leverage, highly influence it.Practical implications – This study contributes to the literature by analysing the disclosure of the information on intangibles beyond the commonly used disc...

Ownership Structure, Discretionary Accruals and the Informativeness of Earnings

In this paper we use panel data methodology to examine the relationship between ownership structure, discretionary accruals and the informativeness of earnings for a sample of Spanish non-financial companies listed on the Madrid Stock Exchange during the period 1999-2002. We find a non-linear relationship between insider ownership and discretionary accruals and between insider ownership and earnings explanatory power for returns. This supports the hypothesis that insider ownership contributes both to the informativeness of earnings and to constraining earnings management when the proportion of shares held by insiders is not too high. When insiders own a large percentage of shares, however, they are entrenched and the relation between insider ownership, discretionary accruals and earnings informativeness reverses. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Bridging the gap between disclosure and use of intellectual capital information

– The objective of this paper is to examine the information regarding intellectual capital disclosed to financial analysts and to study if this data is finally considered in their decision‐making process., – The database consists of 257 reports of presentations held by Spanish companies and 217 analyst reports issued during 2000 and 2001. The paper shows that information related to intellectual capital is widely reported to financial analysts and that they use it in their decision making process., – The findings show that some of the items most frequently disclosed in the meetings and considered in valuation tasks are related to coherence and credibility of strategy, alliances, or leadership. Nevertheless, the comparison shows that the disclosure on intangibles is higher than the level of this information included in the analyst reports. This paper contributes to three streams of literature. The first is the literature on intangible assets, to which we contribute by providing evidence of its disclosure through direct contacts. The second is the literature on analyst valuation, to which we contribute by increasing understanding of the role of intellectual capital in the decision‐making process of financial analysts. Finally, by comparing the results, we test the differences in the focus on intangibles between the main parties involved in the information flow: the discloser and the user of the information., – The analysis of non‐financial information currently reported in private channels and used by financial analysis may be of interest to policymakers or regulators in the setting of mandatory disclosure requirements regarding intangibles

Audit qualifications and corporate governance in Spanish listed firms

Purpose – Corporate governance empirical studies have primarily focused on the effects of corporate characteristics on market value, discretionary accruals, voluntary disclosure and firm performance. Nevertheless, corporate governance characteristics and the legal system of investor protection may also influence the role of statutory auditors and the demand for audit quality. The aim of this study is to investigate the corporate governance role of external audits in the Spanish capital market context.Design/methodology/approach – This article measures this question by considering the conflicts of interests between managers and shareholders analysed in the agency theory. This article uses a logistic regression using a matched pair design, developed with the dependent variable indicating whether the firm receives a qualified opinion, and the independent variables representing ownership concentration, board ownership, board size and family members on the board. Empirical support for this study is gathered fr...

Firm value and ownership structure in the Spanish capital market

Purpose – This study aims to examine the effects on Tobin’s Q of various dimensions of the Spanish ownership structure likely to represent conflicting interests: ownership concentration, insider ownership and bank ownership. Design/methodology/approach – The sample of firms is drawn from the population of Spanish non-financial firms listed on the Madrid Stock Exchange during 1999-2002. This paper uses data that have both cross-sectional and time variation, which allows us to control for unobservable firm heterogeneity and obtain consistent estimates of the coefficients. Findings – Contrary to most previous evidence, the results show that the main ownership structure mechanism that affects firm value is ownership concentration. The findings suggest that ownership concentration appears to influence firm value favourably, but at high levels a detrimental effect causes market valuation to be negatively affected by high levels of large shareholder ownership. These findings, which are different from the linear or non-significant relationships found in other countries, can be explained by the differences in corporate governance systems. Practical implications – The evidence indicates that controlling owners tend to misuse their dominant position at high levels of concentration and to make decisions that destroy market value. The findings also highlight the necessity of alternative corporate governance mechanisms that lead Spanish firms to lower their agency costs and to maximise their market value when blockholders’ and minority shareholders’ interests do not converge. Originality/value – The study builds on prior research in several ways. First, the paper offers new insights into the relationship between corporate governance and economic performance by using data from Spanish listed firms. Second, the study focuses on three dimensions: ownership concentration, insider ownership, and bank ownership, which allow one to get a more accurate picture of the ownership structure-firm value relation. Finally, the study controls for unobservable firm effects by applying the econometrics of panel data.

Ownership Structure and the Cost of Debt

This paper examines the impact on the cost of debt by ownership concentration and shareholder identity; that is, whether the shareholders are banks, non-financial firms, the state, institutional investors or the board of directors. Our analysis suggests that directors who own shares tend to be aligned with external shareholders, that firms with government ownership enjoy lower cost of debt and that banks effectively monitor management, so reducing the agency costs of debt.