ABSTRACT This paper critically assesses the current state of the literature and sets an agenda for future research on Corporate Reporting Transparency Quality (CRTQ) in formal corporate reporting. Employing a systematic literature review approach that follows the Preferred Reporting Items for Systematic Reviews and Meta‐Analyses (PRISMA) model and analysing a total of 70 papers, 65 from top‐ranked journals and five from peer‐reviewed journals published between May 2002 and May 2025, the analysis reveals the absence of a clear and universally accepted definition of CRTQ. This highlights the need to broaden the conceptual scope to encompass financial, governance, operational, social, environmental and risk dimensions. The findings further emphasise the importance of adopting multiple theoretical perspectives to capture the multifaceted nature of CRTQ. Existing studies predominantly rely on disclosure indices that measure the quantity over its quality of information, exposing a critical gap in the literature and demonstrating the need for a multidimensional framework for comprehensive CRTQ assessment. Through a systematic synthesis of existing knowledge and the identification of key theoretical, methodological and empirical gaps on CRTQ, this review offers valuable insights and directions for academics, practitioners and regulators committed to enhancing CRTQ.
Prior research on board gender diversity and earnings management yields mixed findings due to endogeneity concerns and institutional differences. This study exploits California's Senate Bill 826, the first mandatory board gender quota in the United States, as a regulatory shock to examine whether mandated board gender diversity is associated with accrual-based earnings management. Using a difference-in-differences design, we find that firms subject to a binding SB 826 requirement increased female board representation and subsequently exhibited lower absolute discretionary accruals across three accrual models. The estimated reductions range from 21.0% to 24.2% of the sample mean. Cross-sectional tests reveal stronger effects in firms with weaker prior governance and when new female directors have financial expertise. The study provides U.S.-based quasi-experimental evidence on reporting outcomes associated with mandated board gender diversity.
Intensifying geopolitical frictions and policy uncertainty have heightened firms' exposure to supply chain disruptions, with material consequences for financial reporting and working-capital outcomes. We examine whether judicial efficiency-an institutional determinant of contract enforceability-strengthens supply chain resilience. Exploiting a large-scale court reform pilot that exogenously improved civil trial efficiency across pilot and nonpilot cities, we implement a difference-in-differences design using Chinese listed firms from 2015 to 2021. We find that improved judicial efficiency significantly increases firms' supply chain resilience measured from accounting-based indicators. Mechanism evidence suggests that the reform (i) accelerates civil case resolution, (ii) induces firms to reallocate sales and procurement toward partners located in more efficient jurisdictions, and (iii) improves supply chain cost allocation consistent with enhanced coordination and recovery capacity. The effect is stronger for firms that heavily rely on relational contracting, are exposed to greater economic policy uncertainty, and are located in regions with low marketization. Our findings highlight how the institutional quality of contract enforcement shapes supply-chain governance and accounting-relevant outcomes, with implications for managers and policymakers seeking to enhance resilience beyond physical capacity investments.
This study examines the effect of a nature-based corporate strategy consisting of green revenue reporting and biodiversity impact reduction on the corporate cost of capital of S&P 1500 firms. Applying a portfolio-level regression approach for 10 890 firm-year observations from 2015 to 2024, the study reveals that firms adopting biodiversity impact reduction alone have the lowest cost of capital. In contrast, green revenue reporting only firms face a higher capital cost. The study also documents that firms adopting both strategies achieve intermediate benefits, highlighting credibility gains when disclosure complements impact reduction. A cross-sectional analysis reveals that the effects are more potent in high-impact biodiversity industries. The difference-in-differences, dynamic event-time analysis, and governance interactions further strengthen the robustness and validation of the results.
International Financial Reporting Standard (IFRS) 9 Financial Instruments replaced International Accounting Standard (IAS) 39 Financial Instruments: Recognition and Measurement, effective 1st January 2018. This study synthesises empirical research on IFRS 9, focused on the three phases of the standard-setting process: classification and measurement, impairment and hedge accounting. The analysis is guided by accounting choice theory and international accounting literature. The impairment requirements received the most attention in the literature, followed by classification and measurement, and hedge accounting. The review of evidence indicates that firms generally apply the classification and measurement requirements consistent with IFRS 9. It also suggests that impairment losses under IFRS 9 are timelier, are less procyclical and are relevant to stock pricing and future bank risks. In line with accounting choice theory and international accounting literature, the evidence implies that management incentives and institutional contexts influence the effects of IFRS 9, particularly on impairment losses. Finally, the paper highlights gaps in the existing literature and suggests areas for future research.
Institutional investors are pivotal in driving corporate climate risk disclosure (CRD). We investigate the association between nonfundamental-driven price shocks and corporate CRD. Our findings indicate that firms increase CRD when faced with nonfundamental-driven price increases, motivated by the need to meet investors' demands for climate risk information. Conversely, during stock price declines, firms reduce CRD to lower the adverse effects of negative climate risk information. This asymmetric response suggests that managers strategically disclose climate risk information, increasing such disclosures during price increases to capitalize on market optimism while reducing them during price declines to mitigate the intensification of market pessimism. The changes in shareholdings of managers can enhance the alignment between managers' interests and stock price movements, thereby encouraging managers to disclose climate risks during periods of stock price increases. Nonfundamental-driven price increases lead institutional investors to increase their holdings, thereby strengthening their role in promoting firm CRD. Our study offers novel insights into how institutional investor trading activities influence firm CRD and enhances our comprehension of how institutional investors affect firms' voluntary disclosure of nonfinancial information. JEL Classification : G12, G23, G32
This study examines how linking executive compensation to corporate social responsibility (CSR) metrics affects audit fees. The findings reveal that CSR-linked compensation increases audit fees, a result consistent with agency theory which suggests that such contracts can exacerbate managerial opportunism. This research identifies potential underlying channels through which CSR-linked compensation affects audit pricing. Furthermore, the positive relationship is strengthened for auditors with longer tenure or industry expertise but weakened for firms with higher institutional ownership. Overall, this work highlights increased audit fees as a significant cost of CSR-linked compensation, revealing its dark side from a risk assessment perspective.
We investigate how firms' performance feedback influences their biodiversity disclosure practices. Our empirical results offer robust evidence of a positive relationship between the performance gap and the extent of biodiversity disclosure. This association remains consistent across various robustness checks. We demonstrate that managers utilise the performance gap as a strategic tool to enhance corporate image and secure stakeholder resources, which in turn leads to higher levels of disclosure. Furthermore, the effect is particularly salient in firms with strong internal controls and lower exposure to climate risk, those operating in highly polluting industries, and those located in regions characterised by high carbon emissions. Our study enriches the literature by highlighting the significance of corporate performance feedback in shaping disclosure strategies, fostering biodiversity-related transparency, and advancing the agenda of sustainable development.
The aim of this study is to provide evidence of how Australian companies prepared themselves for climate-related risk reporting in its early voluntary stages, with a particular focus on the role of management accountants and whether the approach adopted by management was likely to equip these companies well for the disclosure requirements of the standards that followed. The Task Force on Climate-Related Financial Disclosures (TCFD) Framework, issued in 2017, signalled to companies the importance of preparing for change in climate-related risk reporting. The subsequent International Sustainability Standards Board (ISSB) Standard IFRS S2 Climate-Related Disclosure requirements issued in 2023 and its (phased) mandated Australian Sustainability Reporting Standard counterpart AASB S2 of the same name rely heavily on the concepts embedded in the TCFD Framework. In 2021, we interviewed 18 senior managers involved in climate-related risk reporting as well as two managers from consultancy firms providing advisory services on this topic. The interview data revealed that management encountered both internal and external challenges in implementing climate-related risk reporting and increasingly engaged external consulting firms to develop scenario analyses and enhance their climate resilience reporting. The findings reveal a significant lack of involvement from management accountants in companies' climate change risk management activities, indicating a more symbolic than substantive approach to addressing climate risks. The interviews provide insights into how the role of management accountants in climate-change risk management can be enhanced to promote more significant and substantive climate actions within their companies.
Strengthening government accounting supervision is widely viewed as essential to modern governance and administrative capacity. Yet such interventions can entail real economic tradeoffs. Utilizing China's 2020 Regularized Government Accounting Supervision (RGAS) pilot policy as a quasi-natural experiment, this study examines its impact on corporate innovation. Our findings indicate that firms in pilot regions experienced a significant decline in patent output compared to those in non-pilot regions, with more pronounced effects among growth-stage firms and those in non-high-tech industries. Mechanism analyses reveal that RGAS suppresses innovation primarily by reducing R&D investment and diminishing managerial optimism. Additional evidence suggests that firms' adoption of artificial intelligence (AI) and higher analyst coverage can mitigate these adverse effects. These results highlight a potential trade-off between regulatory oversight and innovative activities. The findings not only provide a significant addition to existing financial supervision theories in advanced economies, but also offer general insights for policymakers.
Based on a sample of public firms domiciled in 41 countries around the world, we find that firms facing a higher level of environmental risk are more likely to adopt climate-linked contracts with quantitative targets. We also find that firms adopting climate-linked contracts are more likely to take real actions to address their concerns about environmental risks. Finally, we present evidence suggesting that environmentally sensitive firms with climate-linked contracts, particularly those involving real actions implemented after the adoption of such contracts, tend to have high firm value. Taken together, our results support the conjecture that effective climate-linked contracting has a real and substantive impact on managerial decision-making, which in turn reduces firms' environmental risks and increases their value.
The literature on voluntary disclosure primarily focuses on management forecasts. However, the determinants of narrative voluntary disclosures, such as letters to shareholders, have garnered limited scholarly attention. This paper examines the impact of social trust on firms' decisions to issue letters to shareholders. We find that firms in regions with higher social trust are more inclined to issue such letters. This effect is more pronounced for firms exhibiting weaker institutional environments, less influence from Confucianism and lower firm-level credibility. Furthermore, we identify the mechanism through which social trust facilitates the issuance of letters to shareholders: curbing corporate misconduct. Lastly, we present evidence indicating a favourable market reaction to the issuance of letters to shareholders. Overall, our findings suggest that social trust enhances the credibility of information, thereby encouraging greater voluntary narrative disclosures. This study contributes to prior work on the determinants of voluntary disclosures and the influence of social trust. Additionally, this research enhances our understanding of disclosure practices related to letters to shareholders and offers some insights for regulators on how to improve disclosure practices by strengthening informal institutions.
Government intervention in tax authorities, which can compromise enforcement independence and undermine its governance role, remains a common challenge across both developed and emerging economies. This study examines how enhanced tax enforcement independence affects firm-level related-party transactions (RPTs) by leveraging China's State Tax Bureaus and Local Tax Bureaus merger as a quasi-natural experiment. We find that greater tax enforcement independence significantly reduces RPTs, particularly abnormal ones. The effect is more pronounced in regions with lax enforcement and underdeveloped markets, and firms with weaker governance environments. The strengthening of enforcement power by tax authorities is an important influencing mechanism. Furthermore, the merger can filter out improper RPTs, thereby improving firms' future financial performance and market value. Overall, our findings highlight the critical importance of safeguarding tax enforcement independence for corporate governance worldwide, providing valuable insights for tax system reform in various countries.
This study analyzes how compensation gaps influence corporate social responsibility (CSR) by focusing on the chief executive officer (CEO)–employee pay ratio. The empirical results reveal that companies with larger CEO–employee pay ratios exhibit worse CSR performance. In addition, this study demonstrates that the negative relationship between the CEO–worker compensation gap and CSR performance is moderated by board structure, institutional shareholdings, and managerial ability. The robustness of the main findings is guaranteed by addressing the endogeneity problem and using alternative measures. Collectively, these findings highlight the impact of the CEO–worker compensation gap on CSR and provide empirical evidence from the perspective of social welfare that can be used by researchers, regulators, and practitioners to evaluate pay gap regulations.
This study examines the impact of top management team (TMT) education experience heterogeneity on corporate innovation. Using a dataset of Chinese listed companies during 2008–2017, we find robust evidence of a positive relationship between TMT education experience heterogeneity and corporate innovation. Our findings remain consistent across various robustness checks, including a firm fixed effects model, extended test windows of corporate innovation, controlling for potentially omitted variables, excluding firms in first‐tier cities, instrumental variable estimations and analysis of an exogenous shock. The positive effect is more pronounced for firms with higher managerial remuneration and those deemed more socially important. Further analysis reveals that enhanced risk‐taking and improved social relationships are the two channels through which TMT education experience heterogeneity promotes corporate innovation. Our study contributes new insights into the effects of TMT education experience heterogeneity.
This paper investigates the impact of CFO turnover on value relevance. We focus on CFOs because they have primary responsibility for financial reporting quality. We hypothesise that CFO turnover leads to uncertainty about financial reporting quality and the timeliness of financial disclosures, thereby reducing value relevance. Using a sample of US publicly listed firms from 2013 to 2020, we find that CFO turnover reduces value relevance, and the negative relation between CFO turnover and value relevance resolves within three years. Furthermore, we find that CFO turnover following financial restatements does not affect value relevance. These results are consistent with the view that CFO turnover influences stakeholders’ uncertainty regarding financial reporting quality, which diminishes as the new CFO stays longer at the firm. In addition, the impact of CFO turnover on value relevance varies depending on the reason for turnover (e.g., restatement or dismissal). The results highlight the importance of CFO turnover in the market perception of financial reporting risk.
