Policymakers have increasingly encouraged the inclusion of business model and strategy commentary (strategy disclosure) in annual reports as a central pillar of effective corporate reporting. We examine the effects of the UK Corporate Governance Code 2010 that mandated strategy disclosure in annual reports for a subset of London Stock Exchange firms. We begin by investigating whether the mandate induces an increase in annual report strategy disclosure. Our findings confirm a significant increase in strategy disclosure following the mandate, with the effect more consistently identified in presentation-based measures that rely on dedicated strategy sections within annual reports. We then examine the mandate’s effect on aspects of firms’ information environment. First, we examine the effect on investor information asymmetry (proxied by the bid-ask spread) and find a significant reduction following the mandate. Second, we investigate whether strategy disclosure in timelier communication channels (investor presentations and earnings press releases) helps explain this effect. We find evidence that strategy disclosure in complementary channels mediates the relation between annual report strategy disclosure and lower information asymmetry. Overall, our findings suggest that mandated strategy disclosure can improve firms’ information environments both directly through annual report disclosure and indirectly through cascade effects on timelier disclosure channels.

This paper provides a comparative analysis of sustainable and conventional syndicated loan spreads and pricing. Using a cross-section of 24,962 syndicated loan tranches closed between 2018 and 2022 in OECD countries, we show that sustainable and conventional loans are differently priced, spreads of sustainable versus conventional loans do not differ significantly, and banks rely on contractual, macroeconomic, bank syndicate structure, and borrowers’ characteristics when pricing sustainable tranches. At the deal-level, our results support the hypothesis of sustainable debt financing as a mechanism for reducing firms’ funding costs. We also find that economies of scale, institutional, and information asymmetry arguments affect firms’ choice between sustainable and conventional syndicated deals.

This paper examines the pricing of green bonds vis-à-vis standard corporate bonds.Using a cross-section of green bonds issued by corporates in the 2014-2021 period, we build a matched sample of quasi-identical conventional bonds and find a statistically insignificant green bond premium of -7.2 bps.These results remain identical when creating subsamples according to the currency of denomination (euro versus USD) and issuer types (financial versus nonfinancial firms), and when controlling for contractual, macroeconomic, and several fixed effects.Our findings imply that there is no pricing difference between bonds that mainly differ with respect to their green label, and investors are not willing to exchange financial returns for non-pecuniary environmental benefits.

This paper studies the adequacy of financial and non-financial disclosures in the government's consolidated annual report for political accountability of public-private partnerships (PPPs). The empirical evidence from the comparative study shows that neither the UK nor Portugal complies with the information needs of the parliament because several disclosures deemed necessary for the functioning of the political accountability relationship are missing. Furthermore, in the case of Portugal, resource dependence and coercive institutional pressures related to the financial bailout during the sovereign debt crisis justify the increase in the level of disclosures. Such evidence also suggests that a comprehensive external reporting framework for PPPs in their post-procurement phase should be devised. The results present novel evidence concerning public sector accounting comparative studies by focusing on specific transactions and may have important implications for policymakers regarding the design of the disclosures deemed necessary.

Supreme Audit Institutions (SAIs) play an active role in the government's accountability to the parliament. Public-private partnerships (PPPs) are a different route used to deliver infrastructure-based public services by private sector entities compared to traditional public procurement. Due to their nature, PPPs raise specific issues related to transparency for public accountability and SAIs, through the independent and competent audit they provide, may enhance the information content of the accountability relationship between the government and the parliament. We conducted a documentary analysis of 16 PPP audit reports issued by the Portuguese Court of Auditors (CoA) to analyze the audit process and outputs. Overall, our evidence suggests that the CoA, through the audit reports, reduced the information asymmetry by disclosing relevant information for more comprehensive public scrutiny and political accountability of PPPs and made several recommendations towards better PPP governance and management. Furthermore, our findings corroborate the two functions of SAIs, which can both be found in the same audit report: the watchdog function (magistrate and public accountant roles), drawing attention to failures at different stages of the PPP cycle, and the shepherding function (management accountant role), providing advice to the Government towards best practices on PPP governance and management. Considering the Government's reactions to the audit reports and the information available about CoA's recommendations implementation, there are doubts about the desired audit impact on the auditee's change of PPPs governance and management.

The goal of this paper is to study how firms’ cash holdings have recently performed. We have not only used GMM approach, but also a pioneer econometric approach to evaluate the determinants of firms’ cash holdings, ML-SEM. The results are more robust in comparison with those obtained using GMM. Our results showed that cash holdings have increased during the 2008 financial crisis and rose significantly after that time. The exception were firms placed in the United States and emerging markets. We have found that cash holdings, in general, were positively influenced by the banking system and capital market, although the results have been more robust for the first variable. Our results also showed that the development of the rule of law and shareholder rights lead to a decrease on firms’ cash holdings, which confirms the agency theory as an explanation of firms’ cash holdings.

This paper interconnects the literature on circular economy and sustainable finance.In addition to describing the reasons behind circular economy projects, this paper surveys the literature on financing circularity.The financial industry plays a significant and increasing role in promoting sustainability by supporting sustainable investment projects.To obtain funds for circular economy projects, sponsors face additional challenges due to business and financial complexities inherent to such projects.We characterise and describe firms' reasons for developing circular economy projects as well as how these projects are funded by using a clinical study focused on three projects.Extant literature presents 3Rs (Reduce, Reuse and Recycle); the reduction of cost and pollution; improvement in competitiveness, innovation, and processes; improvement of ESG ratings, and enhance reputation.All these reasons are positively correlated and address resource scarcity, impact on environment, and economic concerns.Innovative circular projects are typically funded via a mix of sustainable equity -venture capital funds, impact investors, EU funds -and debt -sustainable bonds (green and ESG bonds) and loans.

The accounting and reporting of public-private partnerships (PPPs) is a matter of extensive debate and is associated with a compelling incentive to follow the PPP route for the construction of public infrastructures, rather than traditional public procurement, even if the PPP route is not affordable and fails to achieve value for money in comparison to traditional public procurement. The aim of this study is to empirically evaluate the so-called hidden debt hypothesis. Using a novel dataset for the Portuguese roads sector, we studied the annual reports of the operators since the adoption of International Financial Reporting Interpretations Committee (IFRIC) 12 from 2010 up until 2017. Our results show a lack of transparency in the reporting of PPPs in public accounts, as well as a material difference between our simulation of the impact of (International Public Sector Accounting Standards) IPSAS 32 in public accounts, and also the impact resulting from the application of the European System of Accounts, according to which official debt figures are calculated. The paper also presents evidence of the effects of the financial bailout on PPPs accounting. Overall, the results show that public debt is understated from 1.96% of gross domestic product (GDP) in 2010 (3,519 million euros), to 3.99% of GDP in 2014 (6,907 million euros) and an average of 11,027 million euros of fixed assets for the period 2010-2017 are not reported in the Portuguese State Accounts. The results highlight the need for a closer alignment between national accounts and accrual accounting based on IPSAS standards.

This paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities.

We develop and test a model of high quality annual report discourse. The model is trained and evaluated on reports published between 2007 and 2018 by London Stock Exchange-listed firms shortlisted for an award by corporate reporting experts. We use methods from computational linguistics to identify an initial set of 19 features that distinguish quality according to what management say (i.e.: content) and how they say it (i.e.: language structure). We supplement these features with popular bag-of words proxies drawn from extant research (document length, reading ease, net tone, forward-looking content, and uncertainty). Stepwise regression yields a parsimonious quality model comprising 10 features that suggest more strategy-related commentary, less focus on growth, and greater language accessibility that promotes cognitive processing (evidenced by more relevancy markers, greater connectivity, more exclusive forms of language, and fewer grammatical words). The model predicts over 70% of shortlisting cases in out-of-sample tests and outperforms a baseline model comprising popular bag-of-words features.

This paper examines the overreaction hypothesis on market indices for three- and five-year investment periods using end-of-month data from 49 Morgan Stanley Capital International indices from December 1970 to December 2018. The returns were computed as holding-period returns, instead of cumulative average returns, to avoid an upward bias. We found economically and statistically significant return reversals for both the three-year and five-year investment periods. When implemented in developed markets only, there is evidence that supports the overreaction hypothesis, although the excess returns are smaller than those observed in the whole sample. Not only did the losers outperform the winners, but the former were also less risky. Notwithstanding these results, the overreaction strategy is sensitive to the periods considered, thus highlighting the possibility that its success is not time stationary.

We provide a methodological contribution by developing, describing and evaluating a method for automatically retrieving and analysing text from digital PDF annual report files published by firms listed on the London Stock Exchange (LSE). The retrieval method retains information on document structure, enabling clear delineation between narrative and financial statement components of reports, and between individual sections within the narratives component. Retrieval accuracy exceeds 95% for manual validations using a random sample of 586 reports. Large-sample statistical validations using a comprehensive sample of reports published by non-financial LSE firms confirm that report length, narrative tone and (to a lesser degree) readability vary predictably with economic and regulatory factors. We demonstrate how the method is adaptable to non-English language documents and different regulatory regimes using a case study of Portuguese reports. We use the procedure to construct new research resources including corpora for commonly occurring annual report sections and a dataset of text properties for over 26,000 U.K. annual reports.

This chapter describes and evaluates the use of Information Extraction and Natural Language Processing methods for extraction and analysis of financial annual reports in three languages: English, Spanish and Portuguese. The work described retains information on document structure which is needed to enable a clear distinction between narrative and financial statement components of annual reports and between individual sections within the narratives component. Extraction accuracy varies between languages with English exceeding 95 %. We apply the extraction methods on a comprehensive sample of annual reports published by UK, Spanish and Portuguese non-financial firms between 2003 and 2014.

The goal of this paper is to study the determinants of firms’ cash holdings and how cash holdings were affected by the financial crisis of 2008. Using data from the period of 1995 to 2014 of non-financial firms, we present almost 265,000 firm-year observations. Our results suggest that cash holdings have a positive relationship with investment set and a negative relationship with liquidity and firm size. Our results also show that cash holdings are influenced by capital market development and banking sector, as well as by inflation. Agency theory determinants demonstrate that firms in common law countries and countries with higher law enforcement still hold higher amounts of cash holdings. Cash holdings post-crisis are higher than pre-crisis and there is a spike in cash holdings during 2009. Our hypothesis for these results are explained by the precautionary motive.

Large scale financial narrative processing for UK annual reports has only become possible in the last few years with our prior work on automatically understanding and extracting the structure of unstructured PDF glossy reports. This has levelled the playing field somewhat relative to US research where annual reports (10-K Forms) have a rigid structure imposed on them by legislation and are submitted in plain text format. The structure extraction is just the first step in a pipeline of analyses to examine disclosure quality and change over time relative to financial results. In this paper, we describe and evaluate the use of similar Information Extraction and Natural Language Processing methods for extraction and analysis of annual financial reports in a second language (Portuguese) in order to evaluate the applicability of our techniques in another national context (Portugal). Extraction accuracy varies between languages with English exceeding 95%. To further examine the robustness of our techniques, we apply the extraction methods on a comprehensive sample of annual reports published by UK and Portuguese non-financial firms between 2003 and 2015.

Using a firm-level survey database covering 41 countries, we evaluate firms’ abnormal retained earnings. The results of our work show that the trends of cash holdings and retained earnings are independent. While cash holdings around the world are increasing, the opposite has occurred for retained earnings. We show that cash holdings are influenced by precautionary motive and retained earnings by firms’ growth opportunities. Abnormal retained earnings have risen with GDP growth and decreased following the 2008 financial crisis. This result also confirms the hypothesis of firms’ growth opportunities. US firms present positive abnormal retained earnings after the 2008 financial crisis, contrary to the remaining firms around the world. This can explain recent trends in the US stock market.

Working time is a central and conflictual issue of the employment relations, with the unions aiming to reduce it and the employers emphasizing the need for their flexibility. In the last decades a deep reorganization of working time has been observed. It has been regulated according to several models that articulate collective bargaining, state intervention and social concertation processes. In the Portuguese public administration, the employment relations changed profoundly. First, under the impetus of the New Public Management; subsequently in the context of the crisis and the intervention of the Troika. In this sector, working conditions have traditionally been defined by legislation, in line with the existing type of contracts. With the approximation of the labour regime to that of the private sector, the right to collective bargaining was granted by law in 2004, but only to workers with the new contract of employment in public functions. However, both this law and another one of 2008 imposed some specificities, in particular restricting the subjects that can be negotiated. The purpose of this paper is to highlight the main trends in working time regulation that emerge from collective bargaining in this sector. It is based on a documentary analysis of the collective agreements published between 2009 and 2015, as well as other documents. Some relevant conclusions will be drawn, regarding the regulatory standards. The unilateral policy pursued by the previous right-wing government from 2013 till 2015 will also be highlighted. After imposing the 40 hours of work a week by law, it refused to approve a several hundred freely negotiated conventions that maintained the maximum working week in 35 hours. At the end of its term, that government admitted that possibility in exchange for the unions' acceptance of the adaptability of working time. Only eleven conventions were signed within this framework.

competentes do ministério responsável pela área laboral.