We examine stakeholders’ comment letters regarding the Hong Kong Exchange’s (HKEX) 2015 Consultation Paper, which proposed mandating ESG reporting in Hong Kong. We test for significant differences in ...responses between stakeholder groups and whether the HKEX’s decision was consistent with stakeholders’ preferences in the consultation process. Examining comment letters submitted by six lobbying groups—preparers, investors, the accounting profession, NGOs, other institutions and individuals—we analyze survey responses using textual analysis software and statistical tests. We find that users and the accounting profession participated more than preparers. We also find that preparers and users took different positions on mandating ESG reporting when lobbying the HKEX, whereas preparers and the accounting profession advocated similar positions. Moreover, we find a significant association between stakeholder groups’ preferences and the HKEX’s decision on most proposed changes.
PurposeThe purpose of this paper is to enhance conceptual understanding of reporting boundaries in corporate annual reports by developing a conceptual framework of the rules and principles, referred ...to here as dimensions, underlying boundaries. A total of nine contemporary regulations/guidelines are compared in terms of the boundary dimensions identified to illustrate similarities and differences in boundary concepts.Design/methodology/approachTo develop a conceptual framework of reporting boundary dimensions, academic and industry literature were analysed to identify boundary dimensions. Thereafter, nine contemporary regulations/guidelines were compared in terms of these dimensions. A qualitative approach was taken including document analysis and content analysis.FindingsA total of 10 key boundary dimensions were identified through analysis of academic and industry literature. Each dimension represents a continuum along which regulations/guidelines can position themselves. Taken together, the 10 dimensions provide a comprehensive description of the chosen boundary concept.Originality/valueThe paper contributes to accounting theory by providing a holistic conceptual framework of dimensions relating to reporting boundaries, thus answering calls for more conceptual development of the boundary construct. The conceptual framework and comparison of contemporary regulations/guidelines adds to scarce literature considering financial and non-financial boundaries simultaneously, which is relevant for annual reports. From a practical perspective, the paper brings renewed visibility to boundaries with implications for preparers, users, standard setters and auditors of annual reports.
There are currently limits in our understanding of strategic network performance due to the complexity of the underlying processes involved. Improving our understanding of performance is critical if ...we are to improve network functioning, an important managerial problem. This paper addresses a research gap in strategic network performance by investigating: efficiency and effectiveness at the network level of analysis. A multiple case study methodology is used to investigate two Australian agri-business strategic networks. The cases suggest that processes relating to building actor webs and collective sensemaking are crucial for improving strategic network effectiveness, whereas network efficiency is influenced by developing activity patterns and utilizing resource constellations. The cases also highlight potential trade-offs between network effectiveness and efficiency in relation to performance at the network level. The paper contributes an empirically informed theoretical framework for understanding how network level processes influence network performance.
•The study investigates performance at the network level of analysis.•Both effectiveness and efficiency are studied empirically within the same study at the network level.•Strategic network effectiveness is directly influenced by building actor webs and collective sensemaking.•Strategic network efficiency is directly influenced by developing activity patterns and utilizing resource constellations.•Positive performance perceptions emerge if both effectiveness and efficiency develop but not when effectiveness is absent.
Purpose
The purpose of this study is to develop an understanding of how change in environmental practices occurs in business networks. The study examines what types of network change processes occur ...in bringing about environmental change. Further, the basic change process theory types (life-cycle, teleology, dialectics and evolution) involved in the change processes are analyzed.
Design/methodology/approach
A multiple, embedded, network case study was undertaken in the Australian agrifood sector, focusing on the pork and dairy industries.
Findings
Change was found to occur through the interaction of multiple network processes operating simultaneously and sequentially over time. Thirteen network process categories were identified, grouped further into legislative, business case and altruistic overarching motivations. Legislative change processes emphasize the need for continued government intervention through enforced legislation. Teleology and dialectics were common at the beginning of many change processes, followed by life-cycle theory types.
Originality/value
The study brings together change process conceptualizations from prior unconnected literatures into a comprehensive change process categorization framework. Examining changes in the activity dimension adds to network dynamics literature previously focusing on changes in the actor and resource dimensions. Contributions are made to processual research methods by theoretically and empirically clarifying connections between events, activities and processes. Analyzing the underlying change process theory types at the network level adds to both management and business network literature. Finally, the study answers calls to study sustainability issues at a network level.
Supply chain reporting has gained increased scrutiny as companies expand their global supplier networks, address climate change risks/opportunities and with the recent introduction of modern slavery ...legislation. The question remains as to whether supply chain disclosures address stakeholder requirements. We compare the supply chain disclosure preferences of 20 stakeholders with current disclosure practice for a sample of large listed companies in Australia. We contribute to the emerging supply chain disclosure literature by documenting the factors driving and hindering supply chain disclosure. Further, we offer theoretical and policy implications arising from analysis of stakeholder preferences, drivers and challenges to supply chain reporting.
PurposeThis study investigates the impact of environmental, social and governance (ESG) disclosure on firm financial performance under a mandatory disclosure regime in Hong ...Kong.Design/methodology/approachThe authors examine the largest 109 firms listed on the Hong Kong Exchange (HKEX) as of the financial year of 2019. The authors use a manually constructed index based on the most current 2019 ESG Reporting Guide launched by HKEX, followed by quantitative statistical methods using a model that follows the valuation framework by Ohlson.FindingsThe authors find a significant positive association between total ESG disclosure level and firm financial performance in the main tests. However, when the total ESG scores are partitioned into environmental and social subscores, the results show that only social disclosures are value relevant. Moreover, the results demonstrate that environmental and social subscores are both significant when return on assets (ROA) is used as a dependent variable. Furthermore, the robustness tests show that only qualitative ESG information is value relevant to share prices, while both quantitative and qualitative ESG information are relevant to ROA. In addition, the disclosure quality of annual reports alone is good in explaining the firm financial performance in this study.Originality/valueThis study contributes to existing non-financial reporting literature using hand-collected data as well as examining the firm financial performance of ESG reporting under the mandatory disclosure regime in the Hong Kong context.
Purpose
The purpose of this paper is to provide preliminary evidence on current practices in non-financial key performance indicator (KPI) reporting in annual reports by listed Australian companies ...to inform Australian legislators and accounting standard setters contemplating regulations and guidance for non-financial performance disclosure, including input into the revision of IFRS Practice Statement 1: Management Commentary (2010).
Design/methodology/approach
Non-financial KPIs were hand-collected from the annual report narratives of 40 listed Australian companies from five sectors in 2016. Trends in the type, quantity, comparability and range of non-financial KPIs were analysed, and the association between company characteristics and non-financial disclosure was explored.
Findings
In total, 78 per cent of the sampled companies disclose non-financial KPIs in their annual reports, reporting 11 non-financial KPIs per company on average. The most common category is Employee, followed by Environment, accounting for 68 per cent of non-financial KPIs. Provision of comparators is low, with only 28 per cent of non-financial KPIs disclosed with prior year results and 24 per cent disclosed with a target. Companies disclose across a median of two out of seven categories. Company size is shown to be associated with non-financial measures.
Originality/value
The study contributes initial detailed empirical Australian evidence of non-financial KPI reporting practices. A framework is established for assessing non-financial KPI disclosure, adding to voluntary disclosure studies. A data collection method is developed for collecting KPIs from annual report narratives, contributing to the methodology used in voluntary reporting content analysis.
Purpose
The authors examine the determinants of ESG disclosure and differentiate between voluntary and mandatory disclosure regimes in Hong Kong.
Design/methodology/approach
The authors analyse both ...Bloomberg ESG scores and a disclosure index score, manually constructed according to the 2019 Hong Kong Exchange ESG Guide using regression tests.
Findings
The results indicate that the level of concentrated ownership is negatively associated with the quantity of ESG disclosure only in the voluntary disclosure period, suggesting that agency problems are alleviated when ESG reporting is mandatory. The findings also show that larger firms significantly disclose higher levels of ESG information in both voluntary and mandatory disclosure periods. Furthermore, the extent of ESG disclosure significantly increases when firms' sustainability reports are audited by Big 4 accounting firms only in the voluntary disclosure period. Finally, the control variables are significantly related to the level of ESG disclosure showing that ESG disclosure increased over time and is significantly different among industries.
Originality
The authors make contributions to the literature on non-financial disclosure in relation to ESG reporting by examining the relationship between firm characteristics and ESG disclosure in the Hong Kong context under both voluntary and mandatory disclosure regimes. This study also provides important implications for other stock markets and relevant stakeholders including preparers, users and the sustainability profession.
Purpose
The purpose of this paper is twofold: first, the use of power in a business network context is investigated, in relation to companies’ environmental reporting and practice choices. Second, ...the environmental reporting-practice portrayal gap is examined, focussing on inter-organisational environmental practices (such as green supply chain management).
Design/methodology/approach
A network case study was undertaken in the Western Australian agrifood sector, with the two large, dominant supermarkets as focal actors. Data were drawn from 34 in-depth interviews from 2011 to 2013 and a document review including 15 years of supermarket reports.
Findings
The study showed the exercise of government power bases and its effect on supermarket and other supply chain actors’ reporting and practice choices. The data suggest a differential use of power by supermarkets with suppliers, depending on supplier type and environmental practice characteristics. The study revealed surprisingly transparent reporting of the lack of whole-of-supply-chain approach by the supermarkets and admission of shareholder power over reporting and practice choices. In addition, other reporting-practice portrayal gaps relating to inter-organisational environmental practices were found.
Originality/value
The study provides a unique network level analysis of how power relations interact and influence companies’ choices of environmental reporting and practice, thereby contributing to prior power and environmental reporting literature. Contributions are made to extant literature dealing with the reporting-practice portrayal gap by focussing on inter-organisational environmental reporting and practice.
We investigate the use of an audit case study in developing students’ understanding of the key concept ‘material misstatement’. Using semantic differentials, we explore changes in connotative meaning ...(reflecting emotional reaction) of undergraduate students at an Australian university. Shifts in class perspective indicate students perceive the concept as more useful and less fluid after the case study. We contribute to the audit education literature by focusing on this complex concept and developing teaching methodologies to enhance students’ learning. Results support inclusion of comprehensive case studies embedded with judgement and decision making, in accounting curricula to enhance understanding of complex concepts.
