Optimal vs satisfactory transparency: The impact of global macroeconomic fluctuations on corporate competitiveness

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Optimal vs satisfactory transparency : The impact of global macroeconomic fluctuations on corporate competitiveness. / Oxelheim, Lars.

I: International Business Review, Vol. 28, Nr. 1, 02.2019, s. 190-206.

Forskningsoutput: TidskriftsbidragArtikel i vetenskaplig tidskrift

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TY - JOUR

T1 - Optimal vs satisfactory transparency

T2 - International Business Review

AU - Oxelheim, Lars

PY - 2019/2

Y1 - 2019/2

N2 - Being able to separate temporary global macroeconomic influences – caused by fluctuations in exchange rates, interest rates and inflation – from intrinsic performance – related to a superior product, production process or management – is crucial to assessing the development of a firm's competiveness. Against that background, this paper analyzes institutions’ role in making firms supply outside shareholders with relevant information corresponding to satisfactory transparency from the shareholder perspective. Based on a sample of the 100 largest public European firms, it is found that no firm provided information to a level deemed satisfactory by the outside shareholder. One explanation may be that optimal transparency for the firm does not equal satisfactory transparency for the outside shareholder. However, the implementation of IFRS/IAS 1 in the EU as of 2005 and a company's international cross-listing activities exhibit associations with a better supply of information and a narrowing of the gap. Shareholders in the Anglo-Saxon corporate governance system are provided with more relevant information than those in other corporate governance systems. The paper adds to the literature on the role of institutions in international corporate governance, with a particular focus on information asymmetries in an international business context.

AB - Being able to separate temporary global macroeconomic influences – caused by fluctuations in exchange rates, interest rates and inflation – from intrinsic performance – related to a superior product, production process or management – is crucial to assessing the development of a firm's competiveness. Against that background, this paper analyzes institutions’ role in making firms supply outside shareholders with relevant information corresponding to satisfactory transparency from the shareholder perspective. Based on a sample of the 100 largest public European firms, it is found that no firm provided information to a level deemed satisfactory by the outside shareholder. One explanation may be that optimal transparency for the firm does not equal satisfactory transparency for the outside shareholder. However, the implementation of IFRS/IAS 1 in the EU as of 2005 and a company's international cross-listing activities exhibit associations with a better supply of information and a narrowing of the gap. Shareholders in the Anglo-Saxon corporate governance system are provided with more relevant information than those in other corporate governance systems. The paper adds to the literature on the role of institutions in international corporate governance, with a particular focus on information asymmetries in an international business context.

KW - Corporate governance systems

KW - Corporate information disclosure

KW - International cross-listing

KW - International financial reporting standards

KW - Intrinsic performance

KW - Macroeconomic fluctuations

KW - Optimal transparency

KW - Satisfactory transparency

UR - http://www.scopus.com/inward/record.url?scp=85048445842&partnerID=8YFLogxK

U2 - 10.1016/j.ibusrev.2018.05.011

DO - 10.1016/j.ibusrev.2018.05.011

M3 - Article

VL - 28

SP - 190

EP - 206

JO - International Business Review

JF - International Business Review

SN - 1873-6149

IS - 1

ER -