Marshall, A.P. and Weetman, P. (2007) Modelling transparency in disclosure: the case of foreign exchange risk management. Journal of Business Finance and Accounting, 34 (5-6). pp. 705-739. ISSN 0306-686XFull text not available in this repository. (Request a copy from the Strathclyde author)
When managers choose not to disclose all the relevant information in their possession in their financial statements, there is an information gap between the managers and users and consequently a lack of transparency. We model the degree of transparency observed when disclosures of foreign exchange (FX) risk management in financial statements are compared to managerial information on FX risk management policy, as evidenced in questionnaire responses. In this comparative study of US and UK firms we find incomplete disclosure in both samples but with differing aspects. In the US case, the information gap is lower where the information has higher relevance or firms with higher financial risk (greater leverage) are signalling the extent of risk, but the gap is greater where firms are in competitive product markets. For the UK sample, the information gap is significantly lower where firms have higher financial risk or higher liquidity but the gap is greater where the shares are more closely held. We conclude that modelling and explaining this aspect of incomplete accounting disclosure in an international setting must be sufficiently flexible to accommodate national differences in managerial behaviour.
|Keywords:||voluntary disclosure, foreign exchange management, proprietary costs, information costs, signalling, Accounting, Finance, Business, Management and Accounting (miscellaneous), Accounting|
|Subjects:||Social Sciences > Commerce > Accounting|
|Department:||Strathclyde Business School > Accounting and Finance|
|Depositing user:||Strathprints Administrator|
|Date Deposited:||07 Aug 2009 09:38|
|Last modified:||22 Mar 2017 10:07|