Do Corporate Governance Characteristics Affect Non-Financial Risk Disclosure in Government-owned Companies? The Italian Experience

Titolo Rivista FINANCIAL REPORTING
Autori/Curatori Alessandra Allini, Francesca Manes Rossi, Riccardo Macchioni
Anno di pubblicazione 2014 Fascicolo 2014/1 Lingua Inglese
Numero pagine 27 P. 5-31 Dimensione file 276 KB
DOI 10.3280/FR2014-001001
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più clicca qui

Qui sotto puoi vedere in anteprima la prima pagina di questo articolo.

Se questo articolo ti interessa, lo puoi acquistare (e scaricare in formato pdf) seguendo le facili indicazioni per acquistare il download credit. Acquista Download Credits per scaricare questo Articolo in formato PDF

Anteprima articolo

FrancoAngeli è membro della Publishers International Linking Association, Inc (PILA)associazione indipendente e non profit per facilitare (attraverso i servizi tecnologici implementati da CrossRef.org) l’accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche

While a considerable amount of research has already been carried out into the corporate governance determinants of non-financial risk disclosure in companies in the private sector, such determinants in the annual reports of listed Governmentowned Companies (LGCs) have yet to be investigated fully. This study attempts to complete the picture. Italian LGCs have been selected for analysis and agency theory has been applied in the public sector under the accountability paradigm. The research investigates whether non-financial risk disclosure provided in the Management Commentary (MC) of Italian LGCs may be affected by ownership concentration, corporate governance mechanisms and company-specific features. The issue is of particular importance in a country where Government intervention has significantly affected its economic development since the nineteenth century. Our findings show that there is a relationship between the level of non-financial risk disclosure and Board diversity, leverage and sector. Our findings also reveal some useful insights concerning policy makers and standard setters.

Keywords:Government-owned companies; accountability; non-financial risk disclosure; corporate governance. First submission: 26 July 2012, accepted: 20 November 2013.

  1. Abraham S. and Cox P. (2007), Analysing the determinants of narrative risk information in UK FTSE 100 annual reports, The British Accounting Review, 39(3), pp. 227-248, DOI: 10.1016/j.bar.2007.06.002
  2. Abu Bakar N.B. and Saleh Z. (2011), Disclosure of Accountability Information in Public Sector: The Case of Malaysian Federal Statutory Bodies. 13th Biennial CIGAR Conference: Bridging public sector and non-profit sector accounting.
  3. Adams M. and Hossain M. (1998), Managerial discretion and voluntary disclosure: empirical evidence from the New Zealand life industry, Journal of Accounting and Public Policy, 17(3), pp. 245-281, DOI: 10.1016/S0278-4254(98)10003-0
  4. Adams R., Hermalin B. and Weisbach M. (2010), The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey, Journal of Economic Literature, 48(1), pp. 58-107, DOI: 10.1257/jel.48.1.58
  5. Agresti A. (2007), An Introduction to Categorical Data Analysis. (New York: John Wiley & Sons), DOI: 10.1002/0470114754
  6. Ang J. and Ding D. (2006), Government ownership and the performance of government-linked companies: The case of Singapore, Journal of multinational financial Management, 16(1), pp. 64-88, DOI: 10.1016/j.mulfin.2005.04.010
  7. Barako D.G., Hancock P. and Izan H.Y. (2006), Factors influencing voluntary corporate disclosure by Kenyan companies, Corporate Governance International Review, 14(2), pp. 107-138, DOI: 10.1111/j.1467-8683.2006.00491.x
  8. Beasley M. (1996), An empirical analysis of the relation between the board of director composition and financial statement fraud, The Accounting Review, 71(4), pp. 443-465.
  9. Beattie V., McInnes W. and Fearnley S. (2004), A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes, Accounting Forum, 28(3), pp. 205-236, DOI: 10.1016/j.accfor.2004.07.001
  10. Beretta S. and Bozzolan S. (2004), A framework for the analysis of risk communication, The International Journal of Accounting, 39(3), pp. 265-276, DOI: 10.1016/j.intacc.2004.06.006
  11. Bianco M., Ciavarella A. and Signoretti R. (2011), Women on boards in Italy. CONSOB, Quaderni di Finanza.
  12. Bozec R., Breton G. and Côté L. (2002), The Performance of State-Owned Enterprises Revisited, Financial Accountability & Management, 18(4), pp. 383-407, DOI: 10.1111/1468-0408.00158
  13. Brammer S. and Pavelin S. (2006), Voluntary environmental disclosures by large UK companies, Journal of Business Finance and Accounting, 33(7-8), pp. 1168-1188, DOI: 10.1111/j.1468-5957.2006.00598.x
  14. Burke R. (2000), Women on corporate boards of directors: Understanding the context, in Burke R. and Mattis M., Women on corporate boards of directors: International challenges and opportunities (Dordrecht: Kluwer Academic Publishers).
  15. Caba Perez C. and Lopez-Hernandez A.M. (2009), Governmental financial transparency in MERCOSUR member countries, International Review of Administrative Sciences, 75(1), pp. 169-181, DOI: 10.1177/0020852308099511
  16. Calabrò A., Torchia M. and Ranalli F. (2013). Ownership and control in local public utilities: the Italian case, Journal of Management and Governance, 17, pp. 835-862, DOI: 10.1007/s10997-011-9206-1
  17. Caldarelli A. and Fiondella C. (2013), La disclosure integrativa e suppletiva nel financial reporting, in AA.VV., Il bilancio secondo i principi contabili internazionali IAS/IFRS, pp. 139-170 (Torino: Giappichelli).
  18. Carlon S., Loftus J. and Miller M. (2003), The challenge of risk reporting: regulatory and corporate responses, Australian Accounting Review, 13(3), pp. 336-351.
  19. Carter D., Simkins B. and Simpson G. (2003), Corporate Governance, Board Diversity, and Firm Value, The Financial Review, 38(1), pp. 33-53, DOI: 10.1111/1540-6288.00034
  20. Chau G. and Gray S. (2002), Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore, The International Journal of Accounting, 37(2), pp. 247-265, DOI: 10.1016/S0020-7063(02)00153-X
  21. Chen C. and Jaggi B. (2000), Association between independent non-executive directors, family control and financial disclosures in Hong Kong, Journal of Accounting & Public Policy, 19(4), pp. 285-310, DOI: 10.1016/S0278-4254(00)00015-6
  22. Cheng E. and Courtenay S. (2006), Board composition, regulatory regime and voluntary disclosure, The International Journal of Accounting, 41(3), pp. 54-81, DOI: 10.1016/j.intacc.2006.07.001
  23. Clark T. and Pitelis C. (1993), The political economy of privatization. (London: Routledge).
  24. Conforth C. (2003), The Governance of Public and Non-Profit Organisations. What do boards do? (London: Routledge), DOI: 10.4324/9780203167571
  25. Core J., Holthausen R. and Larcker D. (1999), Corporate governance, chief executive office compensation and performance, Journal of Financial Economics, 51(3), pp. 371-406, DOI: 10.1016/S0304-405X(98)00058-0
  26. Cornett M.M., Lin G., Shaariar K. and Tehranian H. (2010), The impact of state ownership on performance differences in privately-owned versus state-owned banks: An international comparison, Journal of Financial Intermediation, 19(1), pp. 74-94, DOI: 10.1016/j.jfi.2008.09.005
  27. Dainelli F. and Giunta F. (2011), The value relevance of non-financial performance indicators: new cues from the European fashion industry, Financial Reporting, 3, pp. 81-102.
  28. Denis D. (2001), Twenty-five years of corporate governance research and counting, Review of Financial Economics, 10(3), pp. 191-212, DOI: 10.1016/S1058-3300(01)00037-4
  29. Deumes R. and Knechel W.R. (2008), Economic incentives for voluntary reporting on internal risk management and control systems, Auditing: A Journal of Practice and Theory, 27(1), pp. 35-66.
  30. Dewenter K. and Malatesta P. (2001), State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity, The American Economic Review, 91(1), pp. 320-334, DOI: 10.1257/aer.91.1.320
  31. Dharwadkar R., George G. and Brandes P. (2000), Privatization in Emerging Economies: An Agency Theory Perspective, The Academy of Management Review, 25(3), pp. 650-669, DOI: 10.5465/AMR.2000.3363533
  32. Elshandidy T., Fraser I. and Hussainey K. (2013), Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies, International Review of Financial Analysis, 30, pp. 320-333, DOI: 10.1016/j.irfa.2013.07.010
  33. Eng L. and Mak Y. T. (2003), Corporate governance and voluntary disclosure, Journal of Accounting and Public Policy, 22(4), pp. 325-345, DOI: 10.1016/S0278-4254(03)00037-1
  34. Fama E. and Jensen M. (1983), Separation of ownership and control, Journal of Law and Economics, 26(2), pp. 301-326, DOI: 10.1086/467037
  35. Felo A., Krishnamurthy S. and Solieri S. (2009), Are all audit committee financial experts created equally?, International Journal of Disclosure and Governance, 6(2), pp. 150-166, DOI: 10.1057/jdg.2008.25
  36. Garcıa-Meca E. and Sanchez-Ballesta J. P. (2010), The association of board independence and ownership concentration with voluntary disclosure: a meta-analysis, European Accounting Review, 19(3), pp. 603-627, DOI: 10.1080/09638180.2010.496979
  37. Gray R., Owen D. and Adams C. (1996), Accounting and accountability. (Europe: Prentice Hall).
  38. Grossi G. and Reichard C. (2008), Municipal corporatization in Germany and Italy, Public Administration Review, 10(5), pp. 597-617.
  39. Gul F., Srinidhi B. and Ng A.C. (2011), Does board gender diversity improve the informativeness of stockprices?, Journal of Accounting and Economics, 51(3), pp. 314-338, DOI: 10.1016/j.jacceco.2011.01.005
  40. Guthrie J. (1993), Australian public business enterprises: analysis of changing accounting, auditing and accountability regimes, Financial Accountability & Management, 9(2), pp. 101-114, DOI: 10.1111/j.1468-0408.1993.tb00102.x
  41. Haniffa R. and Cooke T.E. (2005), The impact of culture and governance on corporate social disclosure, Journal of Accounting and Public Policy, 24(5), pp. 391-430, DOI: 10.1016/j.jaccpubpol.2005.06.001
  42. Healy P.M. and Palepu K.G. (2001), Information Asymmetry, Corporate Disclosure and The Capital Market, A Review of the Empirical Disclosure Literature, Journal of Accounting and Economics, 13(1-3), pp. 405-440, DOI: 10.1016/S0165-4101(01)00018-0
  43. Hinna A., De Nito E. and Mangia G. (2010), Board of Directors within Public Organisations: A Literature Review, International Journal of Business Governance and Ethics, 5(3), pp. 131-156, DOI: 10.1504/IJBGE.2010.033343
  44. Ho S.S.M. and Wong K.S. (2001), A study of the relationship between corporate governance structures and the extent of voluntary disclosure, Journal of International Accounting, Auditing & Taxation, 10(2), pp. 139-156, DOI: 10.1016/S1061-9518(01)00041-6
  45. Hodges R., Wright M. and Keasey K. (1996), Corporate governance in the public services: Concepts and issues, Public Money and Management, 16(2), pp. 7-13, DOI: 10.1080/09540969609387915
  46. Huafang X. and Jianguo Y. (2007), Ownership structure, board composition and corporate voluntary disclosure. Evidence from listed companies in China, Managerial Auditing Journal, 22(6), pp. 604-619, DOI: 10.1108/02686900710759406
  47. Huse M. (2005), Accountability and Creating Accountability: a Framework for Exploring Behavioural Perspectives of Corporate Governance, British Journal of Management, 16(IS1) pp. S65-S79, DOI: 10.1111/j.1467-8551.2005.00448.x
  48. Ijiri Y. (1983), On the Accountability-Based Conceptual Framework of Accounting, Journal of Accounting and Public Policy, 2(2), pp. 75-81, DOI: 10.1016/0278-4254(83)90001-7
  49. Jalila J. and Devi S. (2012), Ownership structure effect on the extent of segment disclosure: evidence from Malaysia, Procedia Economics and Finance, 2, pp. 247-256, DOI: 10.1016/S2212-5671(12)00085-8
  50. Jensen M.C. and Meckling W.H. (1976), Theory of the firm: managerial behavior, agency costs and ownership structure, Journal of Financial Economics, 3(3), pp. 305-60, DOI: 10.1016/0304-405X(76)90026-X
  51. Kang H., Cheng M. and Gray S. J. (2007), Corporate Governance and Board Composition: diversity and independence of Australian boards, Corporate Governance, 15(2), pp. 194-207, DOI: 10.1111/j.1467-8683.2007.00554.x
  52. La Porta R., Lopez-de-Silanes F., Shleifer A. and Vishny R. (1998), Law and finance, Journal of Political Economy, 106(6), pp. 1113-1155, DOI: 10.1086/250042
  53. Lajili K. and Zeghal D. (2005), A Content Analysis of Risk Management Disclosures in Canadian Annual Reports, Canadian Journal of Administrative Sciences, 22(2), pp. 125-142, DOI: 10.1111/j.1936-4490.2005.tb00714.x
  54. Lim S., Matolcsy Z. and Chow D. (2007), The association between board composition and different types of voluntary disclosure, European Accounting Review, 16(3), pp. 555-583, DOI: 10.1080/09638180701507155
  55. Linsley P.M. and Shrives P.J. (2006), Risk reporting: A Study of risk disclosures in the annual reports of UK companies, British Accounting Review, 38(4), pp. 387-404, DOI: 10.1016/j.bar.2006.05.002
  56. Maffei M. (2010), La disclosure sui rischi, con particolare riferimento alle banche. (Torino: Giappichelli).
  57. Mangena M. and Tauringana V. (2007), Disclosure, corporate governance and foreign shape ownership on the Zimbabwe Stock Exchange, Journal of International Financial Management and Accounting, 18(2), pp. 53-85, DOI: 10.1111/j.1467-646X.2007.01008.x
  58. McCullagh P. and Nelder J.A. (1989). Generalized Linear Model. 2nd ed. (Florida: Chapman & Hall), DOI: 10.1007/978-1-4899-3242-6
  59. Menozzi A., Urtiaga M.G. and Vannoni D. (2010), Board composition, political connections and performance in state-owned enterprises, Working paper 22/9/2010, FEEM Conference, Milan.
  60. Monfardini P. (2010), Accountability in the new public sector: a comparative case study, International Journal of Public Sector Management, 23(7), pp. 632-646, DOI: 10.1108/09513551011078897
  61. Nielsen S. and Huse M. (2010), Directors’ contribution to board decision-making and strategic involvement: The role of equality perception, Accounting Auditing & Accountability Journal, 15(4), pp. 609-616.
  62. Ntim C.G., Lindop S. and Thomas D.A. (2013), Corporate governance and risk reporting in South Africa: A study of corporate risk disclosures in the pre-and post-2007/2008 global financial crisis periods, International Review of Financial Analysis, 30, pp. 363-383, DOI: 10.1016/j.irfa.2013.07.001
  63. O’Sullivan M., Percy M. and Stewart J. (2008), Australian evidence on corporate governance attributes and their association with forward-looking information in the annual report, Journal of Management and Governance, 12, pp. 5-35, DOI: 10.1007/s10997-007-9039-0
  64. OECD (2005), Guidelines on Corporate Governance of State-Owned Enterprises, OECD Publishing.
  65. Oulasvirta, L. (2010), Public-Sector Accounting and the International Standardization Process of Presenting Financial Statements, Halduskultuur – Administrative Culture, 11(2), pp. 227-238.
  66. Papa M. (2007), Risk disclosures in Italian IPO prospectuses: An analysis of manufacturing and IT companies, Working paper series, SSRN.
  67. Patelli L. and Prencipe A. (2007), The relationship between voluntary disclosure and independent directors in the presence of a dominant shareholder, European Accounting Review, 16(1), pp. 5-33, DOI: 10.1080/09638180701265820
  68. Peda P., Grossi G. and Liik M. (2013), Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities, Journal of Management and Governance, 17(2), pp. 237-259, DOI: 10.1007/s10997-011-9173-6
  69. Potito L. (2002), Limiti del bilancio ordinario di esercizio, Rivista Italiana di Ragioneria e di Economia Aziendale, 11-12, pp. 506-511.
  70. Ravasi D. and Zattoni A. (2006), Exploring the Political Side of Board Involvement in Strategy: A Study of Mixed-Ownership Institutions, Journal of Management Studies, 43(8), pp. 1671-1701, DOI: 10.1111/j.1467-6486.2006.00659.x
  71. Ryan C., Stanley T. and Nelson M. (2002), Accountability disclosures by Queensland local government councils: 1997-1999, Financial Accountability & Management, 18(3), pp. 261-289, DOI: 10.1111/1468-0408.00153
  72. Ryan S. (2012), Risk reporting quality: implications of academic research for financial reporting policy, Accounting and Business Research, 42(3), pp. 295-324.
  73. Schein V.E. (1973), The relationship between sex role stereotypes and requisite management characteristics, Journal of Applied Psychology, 57(2), pp. 95-105, DOI: 10.1037/h0037128
  74. Schippers M., Hartog D., Koopman P. and Wienk J. (2003), Diversity and Team Outcomes: the moderating effects of outcome interdependence and group longevity and the mediating effect of reflexivity, Journal of Organizational Behaviour, 24(6), pp. 779-802, DOI: 10.1002/job.220
  75. Solomon J., Solomon A. and Norton S. (2000), A conceptual framework for corporate risk disclosure emerging from the agenda for corporate governance reform, British Accounting Review, 32(4), pp. 447-478, DOI: 10.1006/bare.2000.0145
  76. Tooley S. and Guthrie J. (2007), Reporting performance by New Zealand secondary schools: an analysis of disclosures, Financial Accountability & Management, 23(4), pp. 351-374, DOI: 10.1111/j.1468-0408.2007.00433.x
  77. Tooley S., Hooks J. and Basnan N. (2010), Performance reporting by Malaysian local authorities: identifying stakeholder needs, Financial Accountability & Management, 26(2), pp. 103-133, DOI: 10.1111/j.1468-0408.2009.00478.x
  78. Trotta M., Scarozza D., Hinna A. and Gnan L. (2011), Can Information Systems facilitate the integration of New Public Management and Public Governance? Evidence from an Italian public organization, Information Policy, 16(1), pp. 23-34.
  79. Wacholder S. (1986), Binomial regression in GLIM: estimating risk ratios and risk differences, American Journal of Epidemiology, 123, pp. 174-184.
  80. Wei T.L., Davey H. and Coy D. (2008), A disclosure index to measure the quality of annual reporting by museums in New Zealand and the UK, Journal of Applied Accounting Research, 9(1), pp. 29-51, DOI: 10.1108/09675420810886114
  81. Xu X. and Wang Y. (1999), Ownership structure and corporate performance in Chinese stock companies, Chinese Economic Review, 10, pp. 75-79, DOI: 10.1016/S1043-951X(99)00006-1
  82. Yukl G. (2002), Leadership in Organizations, 5th ed. (Englewood Cliffs, NJ: Prentice Hall).

  • Corporate governance and risk disclosure: evidence from Saudi Arabia Abdullah Al-Maghzom, Khaled Hussainey, Doaa Aly, in Corporate Ownership and Control /2016 pp.145
    DOI: 10.22495/cocv13i2p14
  • Managing cyber risk in the financial sector: Insights from a case study Chiara Crovini, Pier Luigi Marchini, in FINANCIAL REPORTING 1/2023 pp.97
    DOI: 10.3280/FR2023-001004
  • Non-financial disclosure and women on board: Is a mandatory approach on gender quotas effective to increase communication quality? Rebecca Miccini, in FINANCIAL REPORTING 2/2021 pp.45
    DOI: 10.3280/FR2021-002002
  • La disclosure nei Piani della Performance delle università italiane. Intenti simbolici verso approcci sostanziali di legittimazione Alessandra Allini, Adele Caldarelli, Rosanna Spanò, in MANAGEMENT CONTROL 1/2017 pp.37
    DOI: 10.3280/MACO2017-001003
  • Is risk reporting a possible link between financial and management accounting in private firms? Chiara Crovini, Giovanni Ossola, in FINANCIAL REPORTING 1/2021 pp.29
    DOI: 10.3280/FR2021-001002
  • Compliance with Corporate Governance Principles by Energy Companies Compared with All Companies Listed on the Warsaw Stock Exchange Elżbieta Izabela Szczepankiewicz, Joanna Błażyńska, Beata Zaleska, Farid Ullah, Windham Eugene Loopesko, in Energies /2022 pp.6481
    DOI: 10.3390/en15176481
  • The Explanatory Factors of Risk Disclosure in the Integrated Reports of Listed Entities in Brazil Fabio Albuquerque, Eveline Monteiro, Maria Albertina Barreiro Rodrigues, in Risks /2023 pp.108
    DOI: 10.3390/risks11060108
  • Legitimating efforts in Performance Plans. Evidences on the thoroughness of disclosure in the Italian Higher Education setting Alessandra Allini, Adele Caldarelli, Rosanna Spanò, Annamaria Zampella, in MANAGEMENT CONTROL 1/2019 pp.143
    DOI: 10.3280/MACO2019-001007
  • Audit Committees and COVID-19-Related Disclosure Tone: Evidence from Oman Badar Alshabibi, Shanmuga Pria, Khaled Hussainey, in Journal of Risk and Financial Management /2021 pp.609
    DOI: 10.3390/jrfm14120609
  • Not Just a Gender Numbers Game: How Board Gender Diversity Affects Corporate Risk Disclosure Andreas Seebeck, Julia Vetter, in Journal of Business Ethics /2022 pp.395
    DOI: 10.1007/s10551-020-04690-3
  • Board diversity and enterprise risk management: Study in emerging and developed countries Abdul Ghofar, in Corporate Governance and Organizational Behavior Review /2024 pp.180
    DOI: 10.22495/cgobrv8i1p15
  • The board's role in risk disclosure: an exploratory study of Italian listed state-owned enterprises Alessandra Allini, Francesca Manes Rossi, Khaled Hussainey, in Public Money & Management /2016 pp.113
    DOI: 10.1080/09540962.2016.1118935
  • Understanding risk disclosures as a function of social organisation: A neo-Durkheimian institutional theory-based study of Burmah Oil Company 1971–1976 Neveen Abdelrehim, Philip Linsley, Shraddha Verma, in The British Accounting Review /2017 pp.103
    DOI: 10.1016/j.bar.2016.10.007

Alessandra Allini, Francesca Manes Rossi, Riccardo Macchioni, Do Corporate Governance Characteristics Affect Non-Financial Risk Disclosure in Government-owned Companies? The Italian Experience in "FINANCIAL REPORTING" 1/2014, pp 5-31, DOI: 10.3280/FR2014-001001