DO THE QUALITY OF CORPORATE GOVERNANCE AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURE INFLUENCE THE RELEVANCE OF ACCOUNTING INFORMATION?
DOI:
https://doi.org/10.4270/ruc.2022113Keywords:
Corporate Governance, ESG, Relevance of Accounting InformationAbstract
This research seeks to analyze the influence of the quality of corporate governance and Environmental, Social, and Governance (ESG) disclosure on the relevance of accounting information of Brazilian companies. The methodology is descriptive, quantitative, and documentary, with the analysis of a period of five years (2016 to 2020) of Brazilian companies belonging to the Brasil 100 index (IBrX-100) of Brasil, Bolsa, and Balcão (B3). We performed a panel data regression for the three proposed equations for data processing. The results indicated that the earnings variation (ΔEARN) and the corporate governance index (IQGC) were positively and significantly related to the stock return (RET). On the other hand, the effects of ESG (general) disclosure on stock returns were not confirmed, as there was no statistically significant relationship. However, in the individual analysis of the ESG factors (environmental, social, and governance), a positive and significant relationship was confirmed only for social disclosure (SOC) in the RET, constituting a potential investment opportunity for organizations. These results suggest that the set of practices denoting the quality of corporate governance and social disclosure are relevant to achieving higher stock returns. Given the positive effects of value relevance, this research contributes to boosting incentives for organizations to consider effective mechanisms in their governance structure and invest in ESG actions and strategies.
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References
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Davis-Friday, P. Y., Eng, L. L., & Liu, C. S. (2006). The effects of the Asian crisis, corporate governance and accounting system on the valuation of book value and earnings. International Journal of Accounting, 41(1), 22-40. https://doi.org/10.1016/j.intacc.2005.12.002
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De Nicolò, G., Laeven, L., & Ueda, K. (2008). Corporate governance quality: Trends and real effects. Journal of Financial Intermediation, 17(2), 198–228. https://doi.org/10.1016/j.jfi.2007.10.002
Degenhart, L., Mazzuco, M. S. A., & Klann, R. C. (2017). Relevância das informações contábeis e a responsabilidade social corporativa de empresas brasileiras. Revista de Administração e Contabilidade da Unisinos, 14(3), 157-168. https://doi.org/0.4013/base.2017.143.01
Elshandidy, T. (2014). Value relevance of accounting information: Evidence from an emerging market. Advances in Accounting, 30(1), 176–186. https://doi.org/10.1016/j.adiac.2014.03.007
Elshandidy, T., & Zheng, C. (2021). The value relevance of risk-related disclosure: Does the tone of disclosure matter?. Borsa Istanbul Review. https://doi.org/10.1016/j.bir.2021.06.014
Elzahaby, M. A. (2021). How firms' performance mediates the relationship between corporate governance quality and earnings quality? Journal of Accounting in Emerging Economies, 11(2), 278-311. https://doi.org/10.1108/JAEE-09-2018-0100
Francis, J. & Schipper, K. (1999). Have financial statements lost their relevance? Journal of Accounting Research, 37(1), 319-352. https://doi.org/10.2307/2491412
Francis, J., Lafond, R., Olsson, P. M., Schipper, K. (2004). Costs of equity and earnings attributes. The Accounting Review, 79(4), 967-1010. https://doi.org/10.2308/accr.2004.79.4.967
Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 1-16. https://doi.org/10.1016/j.jcorpfin.2021.101889
Gondrige, E. O., Clemente, A., & Espejo, M. M. S. B. (2012). Estrutura do conselho de administração e valor das companhias brasileiras. Brazilian Business Review, 9(3), 72–95.
Holtz, L., & Sarlo, A. (2014). Efeitos das características do conselho de administração sobre a qualidade da informação contábil no Brasil. Revista Contabilidade & Finanças, 25, 255-266. https://doi.org/10.1590/1808-057x201412010
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432. 10.1007/s10551-016-3099-5
Jadoon, I. A., Ali, A., Ayub, U., Tahir, M., & Mumtaz, R. (2021). The impact of sustainability reporting quality on the value relevance of corporate sustainability performance. Sustainable Development, 29(1), 155-175.
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2023-07-07
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Meneghel, M. F., Kieling, D. L., & Degenhart, L. (2023). DO THE QUALITY OF CORPORATE GOVERNANCE AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURE INFLUENCE THE RELEVANCE OF ACCOUNTING INFORMATION?. Revista Universo Contábil, 18. https://doi.org/10.4270/ruc.2022113
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