Capitals, their disclosures and their effects on the market values of firmsTools Ow, Kean Hong (2018) Capitals, their disclosures and their effects on the market values of firms. [Dissertation (University of Nottingham only)]
AbstractThe period from 2016 to 2017 represents a point of inflection in the Malaysian scene of corporate reporting as the operators and regulators of the Bursa Malaysia Exchange made significant pushes to introduce two different but overlapping reporting frameworks. Just practically months after publicly listed companies (PLCs) in the Bursa Malaysia Exchange released their first Sustainability Reports, they were asked to consider adopting the Integrated Reporting Framework. We can imagine the management of these PLCs asking, “What are the differences?” and “How does the IR work?” In this research we look at both these questions from the aspect of capitals and their disclosures, which underpin the core principles of the IR. Firstly, we want to find out how well are PLCs disclosing their capitals with the Sustainability framework by statistically analysing an initial sample of PLCs. Secondly, with a downsized, more relevant sample, we run correlation and regression analysis on the empirical data to test a small cornerstone of the IR’s principles which link the concept of capitals to value creation. Our first finding revealed that state of voluntary disclosure of capitals under the Sustainability Reporting framework were very poor to the point of being unworkable to their stakeholders. Our second finding revealed that human, financial and manufactured capitals was found to have significant impact on the market value of firms. We concluded that both these findings are essentially empirical evidences, which to a degree, support the argument in favour of adopting IR. Yet due to this being the first iteration of Sustainability Reporting by a small fraction of the PLCs in the Bursa, perhaps the adoption of the IR could be postponed until all the PLCs get use to producing quality Sustainability Reporting. We recommend that this study continue to be run for the next few years as the more and more PLCs submit their Sustainability Reports and their grasps on capitals disclosures in Sustainability Reporting improve.
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