Gianluca Ginesti

Board connections and management commentary readability: the role of information sharing in Italy

Purpose This study aims to determine the impact of information-sharing disseminated through the firms’ board connections on the readability of the management discussion and analysis (MD&A). Design/methodology/approach The investigation conducted in this study is performed by using a regression analysis. The readability of the MD&A is measured by the Flesch reading ease. The level of information-sharing is determined by the degree centrality index. The sample is composed of 83 Italian-listed firms that comprise over 4,000 directors for the period 2008-2012. Findings The main results of this study show a significant relationship between the degree centrality and MD&A readability, suggesting that board connections play a crucial role in improving the quality of external reporting. Research limitations/implications This study uses a limited sample size. Further, we do not isolate the possible effect of other reporting incentives that may affect the readability of external reporting. Practical implications This study argues that for a non-English-speaking country such as Italy, information-sharing is a vehicle for improving the quality of external reporting and the competitiveness of firms in international capital markets. Originality/value This research offers an original contribution to the existent literature by highlighting the role of the firms’ board connections in determining the level of the corporate disclosure readability. This implies the opportunity for future research to take into account the firms’ board connections when they analyze related phenomena.

A Composite Index Approach to Detecting Reporting Quality: The Case of Female Executives in Family Firms

In this chapter, we offer a composite index approach to detect firms’ information quality. Our interest coincides with recent moves among scholars in analysing the quality and understandability of corporate disclosure practices. We test our measure of information quality using a sample of annual reports of Italian family listed firms. We find a positive association between non-family female executives and firms’ information transparency. These findings support the argument that non-family female executives are more likely to reduce agency problems with a net benefit for the information quality. Our study may help policy makers and managers in looking at how to make corporate disclosures easier and more meaningful.

Exploring the impact of intellectual capital on company reputation and performance

Purpose The purpose of this paper is to analyse the impact of intellectual capital (IC) on the reputation and performance of Italian companies. Design/methodology/approach The paper exploits a unique data set of 452 non-listed companies that obtained a reputational assessment from the Italian Competition Authority (ICA). To test the hypotheses, this study implemented several regression analyses. Findings Results support the argument that human capital efficiency is a key driver of corporate reputation. Findings also reveal that companies, which obtained reputational rating under ICA scrutiny, show a positive relationship between IC elements and various measures of financial performance. Research limitations/implications The study focuses on a single country; it is not free from the imprecisions of Pulic’s VAIC model. Practical implications This paper recommends companies that are interested to achieve a robust reputation should consider the human capital as a strategic intangible asset. Second, the results suggest that companies with an ICA reputational rating are able to leverage their intangibles to potentiate performance and competitiveness. Originality/value This is the first empirical investigation on the contribution of IC in generating value for corporate reputation. Additionally, the study contributes to the literature on the link between IC and performance by examining a sample of firms not yet explored in prior research.

Impairment estimates for available-for-sale equity instruments under IFRS: evidence from italian Banks

Literature indicates that accounting choices under a given set of standards is an important topic due to the different economic implications. Daske et al. (2013) suggest that firms have substantial discretion in applying IFRS. Despite the implications on how the firms apply IFRS have motivated many studies, to our knowledge, little is known about the impairment estimates for the Available-for- Sale (AfS) equity instruments. Using a sample of Italian banks over the period 2010-2011, we investigate the determinants of the accounting decisions for impairment estimates. We find that the reporting quality and profitability are explanatory factors of the banks’ decisions to modify the thresholds of the impairment indicators used to assess AfS equity instruments. Our study also suggests that banks use a substantial discretion in implementing the IAS 39 for the AfS equity instruments.