Grantley Taylor

Corporate Communication of Financial Risk

This study provides insights on the Financial Risk Management Disclosure (FRMD) patterns of Australian listed resource companies for the 2002–2006 period leading up to and immediately following adoption of the International Financial Reporting Standards (IFRS). Regression analysis demonstrates that corporate governance and capital raisings of firms are significant and positively associated with FRMD patterns. In contrast, overseas stock exchange listing of firms is significantly negatively associated with FRMD patterns. The findings show that the introduction of IFRS changes corporation’s willingness to communicate risk information.

Corporate governance and different types of voluntary disclosure

Purpose – The purpose of this paper is to investigate the impact of corporate governance on voluntary disclosure of different types of information in annual reports of Malaysian listed firms.Design/methodology/approach – A linear regression model is used to test the association between the level of voluntary disclosure of five key information categories and corporate governance. The sample consists of 100 firms over three different socio‐economic periods: 1996, 2001 and 2006.Findings – There are significant increases in all the key information categories with better communication most pronounced between 1996 and 2001, and a noticeably lower level of communication growth between 2001 and 2006. The strength of a firms corporate governance structure clearly influences the voluntary disclosure of information relating to corporate and strategic directions, directors and senior management, financial and capital markets, forward‐looking projections and corporate social responsibility in 2001 and 2006.Research l...

The Determinants of Reserves Disclosure in the Extractive Industries: Evidence from Australian Firms

This paper examines the determinants of reserves disclosure (RD) in the Australian extractive industries. Our regression results indicate that RD are positively associated with variables relating to corporate governance, foreign listing, existence of reserves in foreign jurisdictions, pledging of reserves in debt covenants, leverage and external (Big 4) auditor, after controlling for firm size, subindustry, shareholder concentration and development/production stage. Additional regression testing shows that the existence of reserves in foreign jurisdictions is the most important determinant of RD in Australia. This paper contributes to a better understanding of the extent and rationale behind the RD practices of Australian resource firms.

Factors determining social and environmental reporting by Indian textile and apparel firms: a test of legitimacy theory

Purpose - – The purpose of this research is to investigate the factors determining the social and environmental reporting (SER) of Indian textile and apparel (TA) firms. Design/methodology/approach - – The 2010 annual reports of a sample of top 100 Indian TA firms listed on the Bombay Stock Exchange were examined to assess the extent of SER. SER was assessed based on the Global Reporting Initiative index applicable to the TA industry. Multiple regression analysis was conducted to investigate the determinants of SER. Findings - – This study reports a low extent of SER in the annual reports of Indian listed TA firms, with a mean disclosure of 14 per cent. On average, firms reported more extensive environmental information, with a mean disclosure of 18.4 per cent, compared to social information, with a mean disclosure of 10.7 per cent. Most firms reported social information relating to “labour practices and decent work”, while the reporting of information relating to “human rights” was sparse. Overall, the SER patterns provide support for legitimacy theory. Consistent with legitimacy theory expectations, corporate size, brand development and audit committee size are significant factors determining the variation in SER. No significant relationship was found between board independence, level of ownership and SER. Originality/value - – There is no existing study specifically on SER by TA firms in India. In fact, there is surprisingly little research on SER in the Indian context in general. Given the dearth in research on corporate social reporting in the Indian context, the study extends prior literature on corporate SER by concentrating on SER of TA firms in an emerging economy. The theoretical contribution of this study is the testing of legitimacy theory in the context of an emerging economy. This study contributes towards practice by delineating the relationship between governance structure and SER, particularly with regard to issues such as child labour. These findings have implications for the future development of reporting standards and regulations in regard to corporate governance in India. The dearth of social reporting by Indian TA firms has implications for foreign purchasers of branded products, as international companies have been implicated in sub-optimal social or environmental practices or incidents.

The influence of international taxation structures on corporate financial disclosure patterns

Abstract This paper investigates the extent of financial instrument disclosures (FIDs) within the annual reports of Australian listed extractive resource companies over a 4-year longitudinal period (2003–2006) and its association with international tax characteristics. Statistical analysis shows that thin capitalisation structures and withholding taxes are positively and significantly associated with disclosure patterns. In contrast, the occurrence of foreign sourced income and tax haven links are significantly negatively associated with FID patterns. These findings demonstrate that international tax structures can influence corporate disclosure patterns. This paper contributes to an understanding of the extent, trends and rationale behind resource firms’ financial instrument disclosure practices in Australia.

Does a Firm’s Life Cycle Explain Its Propensity to Engage in Corporate Tax Avoidance?

Abstract This study examines whether a firm’s life cycle explains its propensity to engage in corporate tax avoidance. Based on the Dickinson (2011) model of firm life cycle stages and a large dataset of US publicly listed firms over the 1987–2013 period, we find that tax avoidance is significantly positively associated with the introduction and decline stages and significantly negatively associated with the growth and mature stages using the shake-out stage as a benchmark. We observe a U-shaped pattern in tax avoidance outcomes across the various life cycle stages in line with the predictions of dynamic resource-based theory. Our findings are consistent using several robustness checks. Overall, our results show that a firm’s life cycle stage is a significant determinant of tax avoidance.

Corporate governance, ownership structure and voluntary disclosure: evidence from listed firms in Malaysia

This paper examines the impact of corporate governance and ownership structure on voluntary disclosure practices of Malaysian listed firms. The extent of voluntary disclosure is determined for a matched-sample of 100 listed firms in three different disclosure regimes during 1996, 2001 and 2006. The findings suggest that regulatory reforms over the 1996 to 2006 period resulted in enhanced corporate transparency and accountability as reflected in more extensive voluntary disclosures. We provide empirical evidence that the extent of voluntary disclosures is significantly associated with the strength of corporate governance structure in 2001 and 2006 and with ownership structure in 1996, 2001 and 1996. The findings of this study are of use to regulators in terms of guiding policy development regarding corporate transparency of publicly listed firms.

Insights on the diversity of financial ratios communication

Purpose - This paper aims to examine the extent of financial ratio communication from an agency theory perspective. Design/methodology/approach - An empirical positivist approach is utilised to explore the predictors of disclosure within the 2007 annual reports of 300 Australian listed companies. Findings - Overall, the extent of financial ratio disclosures is very low (5.3 per cent) with more extensive disclosures within the sub-categories of share market measure, profitability and capital structure. A far lower liquidity and cash flow ratio information is reported. Larger firms with more dispersed share ownership provide more extensive financial ratio information than the others. Further, profit-making firms and Big4 clients exhibit more extensive financial ratio disclosures. Resources firms present significantly lower incidents of financial ratio than the financials and services sector. Corporate governance and capital management initiatives do not have predictive properties. Originality/value - Financial ratio disclosure, although important, is under-researched. A comprehensive set of predictors are investigated. The findings highlight the need for Australian regulators to consider more explicit guidelines or mandatory requirements.

Women on the board of directors and corporate tax aggressiveness in Australia An empirical analysis

Purpose - This paper aims to investigate the impact of women on the board of directors on corporate tax avoidance in Australia. Design/methodology/approach - The authors use multivariate regression analysis to test the association between the presence of female directors on the board and tax aggressiveness. They also test for self-selection bias in the regression model by using the two-stage Heckman procedure. Findings - This paper finds that relative to there being one female board member, high (i.e. greater than one member) female presence on the board of directors reduces the likelihood of tax aggressiveness. The results are robust after controlling for self-selection bias and using several alternative measures of tax aggressiveness. Research limitations/implications - This study extends the extant literature on corporate governance and tax aggressiveness. This study is subject to several caveats. First, the sample is restricted to publicly listed Australian firms. Second, this study only examines the issue of women on the board of directors and tax aggressiveness in the context of Australia. Practical implications - This research is timely, as there has been increased pressure by government bodies in Australia and globally to develop policies to increase female representation on the board of directors. Originality/value - This study is the first to provide empirical evidence concerning the association between the presence of women on the board of directors and tax aggressiveness.

INVESTIGATING SOCIAL AND ENVIRONMENTAL DISCLOSURE PRACTICES BY LISTED INDIAN TEXTILE FIRMS

Using legitimacy theory, this study investigates the extent of social and environmental disclosure (SED) of Indian textile firms over the 2010-2012 period and the factors that explain such disclosure practices. Firm-level characteristics and corporate governance variables are incorporated as key predictors for these important disclosures. This study reveals a relatively low extent of 13.57% of SED in annual reports of Indian textile firms. This finding of low overall voluntary disclosure is largely consistent with the previous studies particularly in the emerging economies setting. The results show that firm size, international brand, audit committee independence, CEO duality, profitability, international certification obtained and year of reporting are statistically significant factors in explaining the variation in extent of SED. Potential concern may arise from such a lack corporate communication related to social or environmental activities and risks as it may lead to questions whether firms domiciled in India and their international brand-name affiliations have been transparent and accountable regarding their production and supply activities. The theoretical contribution of this study is the successful testing of legitimacy theory in the context of an emerging economy. This study highlights the influence of international exposures such as brand development and corporate governance attributes have on the SED communication practices. The dearth of social and environmental disclosure by Indian textile firms has implications for foreign purchasers of branded products as international companies have been implicated in sub-optimal social or environmental practices or incidents. Such international brand-name companies may be responsible for such breaches and face significant adverse publicity if negative social or environmental impacts or breaches of rules or regulations are found subsequent to the supply of these textile products. Significant negative media publicity may have unfavourable consequences on the reputation of these firms and their directors as well as their long-term financial performance. Firms with branded textile products likely use disclosure as an important means to promote an image of them being forward thinking socially and environmentally responsible entities for preserving their legitimacy status. This research offers empirical evidence in regard to social and environmental (SED) practices that may assist regulatory bodies to introduce more focused and effective non-financial disclosure guidelines and regulations.