Essays on Voluntary Disclosure Coursework

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The paper "Voluntary Disclosure" is a perfect example of a finance and accounting coursework. According to Noe (1999), this is the provision of organisations information by its management beyond the requirements of the regulating authorities such as the securities exchange commission and the generally accepted accounting principles (GAAPs). This information is usually regarded as very important by the users of the financial statements of the reporting organisation. Gigler (1994) explains that voluntary disclosure includes information such as non-financial information (social responsibility reporting), the organisation strategies and characteristics. It also includes the prices of the stocks of the company in the market.

Voluntary disclosure is helped all the stakeholders a reporting organisation. The organisation itself benefits by enhanced credibility, has access to liquid markets, gets a lower average of its cost of capital, reduces considerably the danger of litigation of inadequate disclosures and the organisation makes better investment decisions. Cheng & Lo (2006) says that the investors to a company are prepared to receive a lower rate of return on their investments (equity) if the company has disclosed more information of its activities and investments.

There is a negative relation between the investor's expected return and the level of disclosure of information. Eng & Mak (2003) continue to explain that the cost of equity lowers when a firm discloses its information other than the requirements of the securities exchange commission and the generally accepted accounting principles. The investors also are able to make decisions concerning their allocation thereby lowering the cost of capital of a company. The extent of the level of disclosure of an organisation is contained in its financial reporting requirements.

The level of reporting varies depending on the type of business an organisation is involved in, the industry in which it is operating, the size of the organisation and most important the ownership and governance structure of the organisation.

References

Cheng, Q & Lo, K (2006) Insider trading and voluntary disclosures Journal of Accounting Research

Cho, C & Patten, D (2007) the role of environmental disclosures as tools of legitimacy: A research note. Accounting, Organizations and Society

Eng, L & Mak, Y (2003) corporate governance and voluntary disclosure Journal of accounting and public policy

Gigler, F (1994) Self-enforcing voluntary disclosures Journal of Accounting Research

Milne, M (2002) Positive accounting theory, political costs and social disclosure analyses a critical look Critical perspectives on accounting

Noe, C (1999) Voluntary disclosures and insider transactions Journal of Accounting and Economics

Unerman, J Bebbington, J & O'Dwyer, B (2010) Sustainability accounting and accountability Taylor & Francis

Wilmshurst, T. D., & Frost, G. R. (2000) Corporate environmental reporting: a test of legitimacy theory Accounting, Auditing & Accountability Journal

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