Hussein A. Warsame

Managing public impressions: environmental disclosures in annual reports

Abstract Through the juxtaposition of theory and a meso-level empirical illustration of the environmental disclosures included in the annual reports of Canadian public companies operating in the mineral extraction, forestry, oil and gas, and chemical industries over the 1982 to 1991 period, the current study attempts to increase our understanding of the role and functioning of environmental disclosures. Our analyses focus on three concerns: the influence of external pressure on environmental disclosures in annual reports, including the amount and types of strategies used in disclosure; the characteristics of environmental disclosure vis-a-vis other “social” disclosures; and the association between environmental disclosures and actual performance. We question whether such disclosures highlight positive environmental actions, obfuscate negative environmental effects or both.

The accuracy of Canadian and New Zealand earnings forecasts: A comparison of voluntary versus compulsory disclosures

Abstract This study compares the accuracy of earnings forecasts provided in voluntary (Canada) and mandatory (New Zealand) disclosure environments. Previous research indicates that voluntary disclosure is usually undertaken by higher-quality firms who wish to communicate favorable signals to the market, whereas lower-quality firms are unable to mimic these signals, and that by these means the capital markets are capable of making appropriate valuations of the firms. Social regulation which mandates earnings forecast disclosures assumes that the market is imperfect and regulation is required to level the field for the public good. These two environments are compared to draw some conclusions regarding the benefits of regulating forecast disclosure. The results of the comparison suggest that mandatory forecast regulation may force firms to forecast that have neither the ability nor incentives to do so. Instead, the results imply that regulations prohibiting such firms from forecasting may be a more appropriate regulatory strategy.

Sustainability reporting: external motivators and internal facilitators

Purpose – The purpose of this study is to investigate the role of internal variables, such as strategic governance and operational controls, along with external variables that influence sustainability reporting. Design/methodology/approach – Building on the corporate governance and sustainability reporting literature, the authors develop a model to integrate external motivators and internal facilitators to determine their impact on sustainability reporting. The authors also control for a number of financial and non-financial variables that may influence sustainability reporting. The authors limit their sample to the companies in extractive industries that report their greenhouse gas emission to the Government of Canada. The authors collected the data from several data sources including secondary archival databases, newspapers, Web sites and annual reports. Findings – Using a sample of companies in high-polluting industries, the authors found that variables representing both external pressures that act as ...

IFRS and value relevance: evidence based on Canadian adoption

Purpose - – The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada. Design/methodology/approach - – The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted Findings - – The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence. Originality/value - – The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

Environmental disclosure and legitimation in the annual report ‐ Evidence from the joint solutions project

Findings from earlier legitimacy based accounting studies provide evidence that firms respond to threats to their perceived legitimacy by increasing communication to the public. This communication is meant to demonstrate that their actions are commensurate with the values and norms of relevant stakeholder groups. Questions remain, however, as to whether it is merely a form of impression management or a reflection of the congruent activities of the firm. In the late 1990s, a unique situation arose in British Columbia’s coastal forestry industry that enabled us to examine this issue. For many years, this industry had been the target of environmental non‐government organisations’ (ENGOs) campaigns to influence change in forest management practices and conserve the coastal rainforests. In late 1999, a subset of the industry responded by forming a coalition with key ENGOs. The aim of the coalition was to develop a consensus package of recommendations for the Government of B. C. founded on eco‐system based fore...

Effects of the institutional environment on public-private partnership (P3) projects: Evidence from Canada

Abstract The purpose of this paper is to understand the effects of the institutional environment on project outcomes in order to contribute to the accumulating accounting literature on P3s. Based on an empirical study of Alberta’s institutional environment, using Edmonton’s Anthony Henday Highway P3 projects, we analyze how the: a) political environment enables or disenables P3 outcomes; b) policy/business environment impacts project development and implementation; and c) organizational capacity affects P3 outcomes and vice versa.

Do IFRS Based Earnings Announcements Have More Information Content than Canadian GAAP Based Earnings Announcements

Using event study methodology in a Canadian setting, this paper investigates whether the information content of earnings announcements increased for Canadian Venture Exchange (TSXV) firms and Toronto Stock Exchange (TSX) firms following mandatory adoption of international financial reporting standards (IFRS) in Canada. Comparing the two exchanges is interesting because there is generally more information asymmetry between investors and TSXV firms than between investors and TSX firms. A priori, it may be argued that there would be higher information content in the IFRS based earnings announcements for both TSXV and TSX exchange firms in Canada as compared to the Canadian GAAP based earnings announcements because IFRS allows greater flexibility to provide relevant information. If IFRS enables higher transfer of information through earnings announcements, this may benefit investors in TSXV firms more than investors in TSX firms. However, the additional flexibility to provide relevant information in the IFRS-based annual earnings announcements might reduce reliability by increasing uncertainty in the information of the earnings announcements. Our findings indicate that the information content, measured by abnormal stock return volatility and abnormal trading volume during the announcement period, decreased following the adoption of IFRS for both TSXV firms and TSX firms. The results of this study are relevant for US policy makers in their decision to implement IFRS.

Corporate Social Responsibility, Earnings Management, and Firm Performance: Evidence from Panel VAR Estimation

Previous literature investigates links between corporate social responsibility (CSR), earnings management (EM), and firm performance (FP) but has looked at pair-wise relations (CSR-EM, CSR-FP, and EM-FP) for one-way effects without considering endogeneity among the variables. We examine these relations recognizing endogeneity and possible two-way effects and also consider two additional factors, corporate governance (CG) and management compensation (MC) that may influence the interrelations between firms’ FP, EM and CSR. To examine the complex relationships among these endogenous variables (CSR, EM, PF, CG, and MC) under different eras in management oversight, we divide our complete sample period from 1992 to 2009 into a pre-SOX (Sarbanes-Oxley) period (from 1992 to 2001) and a post-SOX period (from 2002 to 2009), and innovatively employ a rigorous panel vector autoregressive (PVAR) approach. We find three main results: (1) CSR had a positive influence on EM in the pre-SOX period but CSR had no impact on EM post-Sox. (2) There is no relation between CSR and FP pre-SOX, but there are bi-directional relations between them during the post-SOX period: a positive influence of CSR on FP and a negative influence of FP on CSR. (3) FP positively affects EM in both pre- and post-SOX periods.

The Role of Micro-Level Organizational Variables in Sustainability Reporting

We investigate quality of sustainability reporting by developing a multi-level research design which incorporates variables that are proxies for general contextual factors, broad-based corporate characteristics, and micro-organizational level characteristics. Previous research has found that general contextual factors and broad-based corporate characteristics are important motivators of sustainability reporting. Although some attention has been given to micro-level organizational characteristics in sustainability performance research, little research has investigated their role in regard to reporting. We selected two micro-level characteristics within the organization that represent control at the highest level of governance, the board of directors, and control that should flow throughout all levels of the organization, the existence of an environmental management system (ISO 14001). ur findings support the validity of the multi-level model. Using a sample of companies that are required to report greenhouse gas emissions to a government agency as our sample, we found that including external influences, corporate characteristics, and micro-level organizational characteristics in our model adds to the explanatory power of our equation. All three levels motivate higher quality voluntary, sustainability reports. Given that there likely will be increased reporting of GHG emissions reductions, along with reporting of general sustainability information, throughout many countries of the world, these findings offer a contribution. As well, this research provides valuable information to the International Integrated Reporting Committee (IIRC) as to how organizational structure and control can support quality reporting.