IR Papers: Transparency update

Mar 22, 2012
<p>A roundup of academic research from the world of IR studies</p>

World o’ transparency update

1. Spain beats Mexico 80 to 59, according to an index of 70 major companies’ corporate transparency on the internet. Index creators say strength and application of the law along with company-level variables such as ownership concentration are among the most telling factors in their analysis.

2.
High-growth service firms invest a lot to acquire and retain customers, creating intangible assets. But do investors use customer metrics to value these firms?

Researchers at the University of Connecticut found investors discount values when service costs per customer are high but boost them when acquisition costs are high. Their data also show relatively high-growth firms tend to disclose customer metrics more frequently, helping to moderate inherent earnings uncertainty.

Tehran telegram

1. A research team at the Tabriz branch of Islamic Azad University finds share yield increased for Tehran Stock Exchange companies that financed through loans from 2005 to 2009. No similar evidence exists for firms that financed via stock issuance.

2.
Having too many institutional investors crimps company value, notes a 2001-2008 study of 71 Tehran Stock Exchange firms, entitled ‘Institutional investors and corporate value: an emerging market scenario’, published in the African Journal of Business Management.

3.
Tehran Stock Exchange companies with high institutional ownership tend to be more involved in aggressive earnings management practices than those with a predominantly retail investor base, according to an investigation of 212 firms over the period 2006-2008.

World o’ reports

1. Most Libyan financial and information managers think CSR disclosure would boost employee morale, according to University of Southern Queensland researchers who surveyed 31 of them.  

2.
An analysis of 39 companies by the Kazakhstan Institute of Management, Economics and Strategic Research finds ‘considerable scope’ for improvement in environmental reporting.

3.
Tunisian investors don’t trust annual reports or corporate IR sites. Sampling 41 Tunisian firms in 2007, investigators linked liquidity only with private information.

Professor’s pick

For a gripping read, check out ‘Listing on the Shenzhen Stock Exchange: behavioral finance implications’. Skip the abstract and get to the gritty accounts of the state of the markets, IR and corporate governance in China.

Published in February’s Proceedings of ASBBS, the paper probes the ‘psychological momentum of clashing authoritarian vs free market cultures’ and finds formerly private companies face significant and unexpected obstacles in adapting to China’s unique open market for their shares.

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