CC BY
17
международный круглый стол
Vera Viktorovna Plotnikova,
Doctor of Economics, associated professor, professor of Department of accounting, analysis of economic activity and audit, Saratov socio-economic Institute (branch) of Plekhanov Russian University of Economics,
Mariya Sergeevna Shilovskaya,
assistant of Department of Economic Security and management of innovations,
Saratov State Technical University named after Yuri Gagarin,
Вера Викторовна Плотникова,
доктор экономических наук, доцент, профессор кафедры бухгалтерского учета, анализа хозяйственной деятельности и аудита, Саратовский социально-экономический институт (филиал)
РЭУ им. Г.В. Плеханова
veryn@yandex.ru
Мария Сергеевна Шиловская,
ассистент кафедры «Экономическая безопасность и управление инновациями», Саратовский государственный технический университет
им. Гагарина Ю.А.
|£<> pakinamariya@gmail.ru
УДК 657.6
CORRELATION ANALYSIS OF THE FINANCIAL POSITION AND THE LEVEL OF CORPORATE TRANSPARENCY OF INFORMATION OF THE ANNUAL REPORTS OF RUSSIAN COMPANIES
The article examines the level of corporate transparency of the annual reports of Russian companies, one of the determining factors of which, in the author's opinion, is the degree of the management's opinion in financial reviews. The form of presentation by the company's management of financial information in the texts of annual reports depends on the conditions that affect the financial position of the company at the time of reporting. The way the management reacts to these conditions and accordingly expresses its opinion on the current situation of the enterprise and the prospects for its development is the information base of this research, which resulted in conclusions on the maturity of Russian business and its readiness to enter a new level of disclosure of corporate information. The author analyzed the relationship between the quality of management's disclosure in financial reviews developed as part of the company's annual reports and the company's financial position through semantic and correlation analysis. At the same time, the effect of the risk of bankruptcy is taken into account. According to the results of the study, the conclusion about higher transparency of the information of annual reports of companies with a stable financial position and low quality of the disclosed information of the majority of companies from the group with a worsening financial situation is justified. Suggested recommendations for improving the quality of information disclosed.
Keywords: integrated reporting, stakeholders approach, financial situation, correlation analysis, semantic analysis, bankruptcy risk.
ISSN 1994-5094 179 ♦-♦
ВЗАИМОСВЯЗЬ ФИНАНСОВОГО ПОЛОЖЕНИЯ И УРОВНЯ КОРПОРАТИВНОЙ ПРОЗРАЧНОСТИ ИНФОРМАЦИИ ГОДОВЫХ ОТЧЕТОВ РОССИЙСКИХ КОМПАНИЙ
В статье исследуется уровень корпоративной прозрачности годовых отчетов российских компаний, одним из определяющих факторов которой является степень выраженности мнения руководства в финансовых обзорах. Во многом форма изложения руководством компании информации о финансовом состоянии в текстах годовых отчетов зависит от условий, оказывающих влияние на финансовое положение компании в момент составления отчетности. То, как реагирует руководство на эти условия и выражает свое мнение о текущем положении предприятия и перспективах его развития, является информационной базой настоящего исследования, по результатам которого сделаны выводы о зрелости российского бизнеса и его готовности к выходу на новый уровень раскрытия корпоративной информации. Проведен анализ взаимосвязи между качеством раскрытия мнения руководства в финансовых обзорах, разрабатываемых в рамках годовых отчетов компаний, и финансовым положением компании с помощью семантического и корреляционного анализа. При этом учтено влияние степени риска банкротства. По результатам исследования на основании эмпирических данных обоснован вывод о более высокой прозрачности финансовой информации, размещаемой в годовых отчетах компаний с устойчивым финансовым положением и низком качестве раскрываемой информации большинства компаний из группы с ухудшающим финансовым положением. Даны рекомендации по повышению качества раскрываемой информации.
Ключевые слова: интегрированная отчетность, стейкхолдерский подход, финансовое положение, корреляционный анализ, семантический анализ, риск банкротства.
In the context of the integration of Russian business into the global economy, the problem of the quality of information disclosure in the annual reports becomes especially urgent. Russia is currently in the process of the transition to the international standards of integrated reporting (hereinafter IO) and GRI standards (Global Reporting Initiative), which obliges the companies participating in this project to be more open to stakeholders.
Traditionally the most interesting part of the annual reports is the information that discloses management's objective overview of their financial position and the prospects for creating value for a long period.
There is a sufficient number of foreign studies related to determining the relationship between the quality of information disclosed in corporate reports of companies and their financial position. Some of them are dedicated to the study of the influence of the quality of information disclosed in annual reports of companies to the valuation of their shares traded on the securities market [6]. Tennyson B.M. and others related the bankruptcies of some American companies to the quality of managerial descriptive information disclosed in annual reports [7]. One study showed a positive relation between the quality evaluation of information disclosed of the financial condition of Italian companies and the forecast precision of financial analysts [8]. In all these studies the methods of economic and mathematical modeling were used as a methodological tool for analysis.
Lately the interest to evaluation and analysis of the quality of corporate information disclosed with the use of text or semantic analysis has increased significantly.
In this article, the correlation analysis between the level of the management's opinion in the financial reviews developed as part of the company's annual reports and the financial situation by using the semantic and correlation analysis is made. At the same time, the companies participating in the analysis were divided into two groups depending on the risk of bankruptcy: LRB (low bankruptcy risk) - with a low bankruptcy
risk and HRB (high bankruptcy risk) - a high bankruptcy risk.
In the final base for analysis were included 30 LRB companies and 30 HRB companies for 2011-2016. The entry criterion of companies in the last category was compliance with the following conditions:
- Losses for 2015 and/ or 2016 years;
- Critical or fragile financial condition according to the methodology for determining the level of financial stability.
To determine the financial condition, seven coefficients were calculated, three of which characterize the financial result of the company:
- Return on average assets (ROA),
- Return on investments (ROI).
- And four coefficients which characterize the financial or material position of the company:
- Current ratio (CR),
- Financial stability index (FS),
- Turnover of current assets (TR),
- Working capital to current assets ratio (OFR).
Then, from the annual reports of the analyzed companies, the financial review texts were extracted. For comparability of data, the same period of 2011-2016 was chosen.
To determine the level of expression of management's opinion in the financial reviews, the method of carrying out a text analysis with the distribution of words on the Lougren-McDonald lists was used [11]. According to this technique, there are several semantic fields or groups that determine the tonality of the words. These include: Positive words; Negative words; words of Uncertainty; Constraining words; Litigious words and Modal words (in more detail the research technique with examples of words is described in the author's previous works [9; 10]).
According to the semantic analysis report, the shares of the words of each semantic group in the total number of words of the text of the financial reviews were calculated with the help of a specialized computer program developed with the participation of the authors.
180
BecmHUK Œœy. 2018. № 4 (73)
In the process of analysis, it is important to define whether there is a correlation between specific groups of words, or rather their share in the total number of words in the reports, and financial indicators of the companies. The correlation analysis allows us to achieve this goal, which establishes not only the dependence, but determines its strength and type. To do this, use the Pearson's correlation coefficient. This coefficient makes it possible to estimate the relation tightness between the two analyzed parameters. Its value varies from -1 to 1, where one means perfect direct (increasing) linear relationship, minus one - the perfect decreasing (reverse) linear relationship.
Graphical interpretation of the results of the correlation analysis is presented in Fig. 1-6. On each diagram, the vertical axis shows the share of companies in the total sample amount, in which the correlation coefficient between each of the financial ratios and the fraction of words of each group in the total sum of the words of the report is more than 0.5. This indicates that there is a strong or fairly moderate relationship between the parameters. All values of the correlation coefficient less than 0.5 are not significant for this analysis. As histogram bars, two types of correlations are shown for two categories of companies:
- DirectLRB - direct correlation for group companies LRB;
- ReverseLRB - reverse correlation for group companies LRB;
- DirectLRB - direct correlation for group companies LRB;
- Reverse LRB - reverse correlation for group companies LRB.
their opinions on the report when the financial situation is improving.
Fig. 2. The results of the correlation analysis between the share of Positive words in the report and the financial position of companies
There is an assumption that the text analysis aimed at determining the positive opinion of company management with the help of positive words should not be significant. This is due to the fact that negative words are practically not used to make a positive statement, but positive words, on the contrary, are often used to mitigate negative statements, in addition to their main purpose - describing positive events. At least, this can explain the inverse relationship between the number of positive words and the financial position of 15-20% of companies. Or it indicates the possibility of distortion of information about the real financial condition.
As follows from Fig. 2, for LRB companies, the association of positive words with the financial position is more often direct and significant at the same time than for companies HRB.
Fig. 1. The results of the correlation analysis between the share of negative words in the report and the financial position of companies
According to Fig. 1, it can be seen that, on average, 35-40% of companies in the sample have almost all coefficients observed an reverse relationship between all financial coefficients and the number of negative words. The trend is quite obvious: when the financial situation of companies is weakening, more negative words become in their reports.
The dependence of the number of positive words and financial position is primary direct for the share of companies in the range of 20-40%, depending on the coefficient. This situation is considered to be natural, as management uses mostly the positive words to reflect
Fig. 3. The results of the correlation analysis between the share of the words of Uncertainty in the report and the financial position of companies
By the presence of words which indicate the uncertainty of the situation, it is possible to assess the management's level of uncertainty in a given situation. According to Fig. 3, the correlation between this group of words and the financial situation on the average in 20% of the companies is the reverse. For profitability indicators, the number of companies with stronger and reverse correlation increases to 40%. At the same time, there is a similar tendency towards stronger correlation among LRB companies, as it happens with positive and
ISSN 1994-5094 ♦-
181 -♦
negative words, which again indicates better disclosure of information. For another 20% of companies in each group, this dependence is direct.
In the first case, if the financial situation worsens, the number of uncertain words in the report will increase. In the second case, management carefully expresses its opinion and makes forecasts using more words which indicate uncertainty in general or uncertainty in the described events, despite the fact of the improving financial condition.
Fig. 4. The results of the correlation analysis between
the share of the Litigious words in the report and the financial position of companies
The percentage of companies in which the share of litigious or legal words and financial position is most prominent is higher in the HRB group. The presence of litigious words in the text of the report indicates the company's involvement in legal proceedings. This dependence was manifested in those companies which disclosed such information in detail. It should be noted that the direction of communication is mostly direct, that indicates a discrepancy between the deteriorating financial situation and the increase in the number of words of this group in the text of the reviews.
Fig. 5. The results of the correlation analysis between
the share of the Modal words in the report and the financial position of companies
The number of modal words in the financial results review for most enterprises does not have a close connection with the financial position of the company. As the data in Fig. 5 shows, for those companies from which it is found (that is, about 10-20%, depending on the group of companies and the financial ratio), the direction of this link is equally direct and reverse. This indicates the lack of significance of this group of words for analysis.
Fig. 6. The results of the correlation analysis between the share of the Constraining words
in the report and the financial position of companies
The words from the group reflecting pressure or restriction indicate the existence of certain requirements for the organization or conditions that in some way restrict its activities or oblige to perform any actions.
Figure 6 shows that the relationship between the financial position and the proportion of restrictive words is reversed and it is observed on average in 20-25% of companies. This proves that the increase in the number of word combinations that indicate any pressure from the external environment or the emergence of new obligations, and the deterioration of the financial situation are interrelated.
The above-mentioned trends in the dependence of different semantic word groups and the financial position of the companies are revealed in less than a third of the total sample of 60 companies, which is confirmed by the data in Table 1 (In gray, cells where the number of companies with correlated parameters exceed the value of 15 units or 25%).
Summarizing the results of the analysis, we can conclude that there is the insufficient level of corporate transparency of the annual reports of Russian companies. The relationship between the level of management's opinion in financial reviews and the financial situation is found on average across all indicators in only 20-25% of companies.
It also should be noted that for all groups of words (especially negative and positive) for LRB companies, correlation coefficients are higher than for HRB companies. This indicates that companies with a good financial position are better to disclose the opinion of management. Companies with unsustainable or critical financial conditions limit information about the financial situation. As the results of reading and verifying the texts of financial reviews showed, many of the companies of the HRB group have less than 300 words of this information or none at all. This fact points to a closed type of management interaction with external users of information. Perhaps, this problem is connected with the unwillingness of the management of companies to disclose the real picture of the business and present their forecasts about the possibilities of restoring financial stability in the foreseeable future.
In the author's opinion, the management of the organization needs to pay special attention to disclosing information on compliance with the going concern principle. This will require the inclusion of an addi-
182 Вестник СГСЭУ. 2018. № 4 (73) ♦-♦
Table 1
Results of the correlation analysis of the total sample (number of companies)
Groups of the words Direction of communication Indicators of financial position and financial results
ROA ROS ROI CR TR FS OFR
Negative Direct 5 4 5 10 6 7 13
Reverse 25 23 22 14 19 18 13
Positive Direct 14 17 15 16 10 10 15
Reverse 5 5 6 9 11 8 10
Uncertainty Direct 8 9 10 14 10 6 13
Reverse 17 16 15 12 11 11 10
Litigious Direct 11 13 9 17 15 15 17
Reverse 9 9 10 9 9 9 10
Modal Direct 9 10 6 14 8 9 12
Reverse 11 13 12 10 9 9 14
Constraining Direct 12 10 12 14 10 12 17
Reverse 11 16 12 7 11 10 6
tional subsection in the financial reviews or a separate section of the annual report in which management will describe how this principle is observed and what measures management has taken or plans to take to improve the financial position of the company and improve its financial results.
1. Бариленко В.И. Бизнес-анализ как инструмент обеспечения устойчивого развития хозяйствующих субъектов // Учет. Анализ. Аудит. 2014. № 1. С. 25-31.
2. Ефимова О.В. Отчетность об устойчивом развитии компании: оценка информационных потребностей пользователей // Вестник РУДН. 2012. № 4. С. 75-82.
3. Ефимова О.В. Отчет об устойчивом развитии как новая форма корпоративной отчетности компании // Аудиторские ведомости. 2014. № 8. С. 36-47.
4. КогденкоВ.Г., МельникМ.В. Интегрированная отчетность: вопросы формирования и анализа // Международный бухгалтерский учет. 2014. № 10. С. 2-15.
5. Малиновская Н.В. Анализ корпоративной отчетности российских компаний на соответствие принципам интегрированной отчетности // Экономический анализ: теория и практика. 2015. № 45. С. 36-48.
6. LiF. Annual Report Readability, Current Earnings, and Earnings Persistence. Journal of Accounting and Economics. 2008. No.45. Р. 221-247.
7. Tennison B.M., Ingram R.W., Dugan M.T. Assessing the Information Content of Narrative Disclosures in Explaining Bankruptcy // Journal of Business Finance & Accounting. 1990. No.17. Р. 391-410.
8. Pisano S., Alvino F. New European Union's Requirements and IFRS Practice Statement "Management Commentary": Does MD&A Disclosure Quality Affect Analysts' Forecasts? // Journal of Modern Accounting and Auditing. 2015. No. 11(6). Р. 283-301.
9. Плотникова В.В., ШиловскаяМ.С., ДворакА.А. Применение методов семантического и корреляционного анализа при исследовании годовых отчетов российских компаний на соответствие принципу интегрированной отчетности «надежность и полнота» // Математическое и компьютерное моделирование в экономике, страховании и управлении рисками: материалы VI Междунар. молодежной науч.-практ. конф. (г. Саратов, 9-11 ноября 2017 г.). Саратов: Научная книга, 2017. С. 174-180.
10. ПлотниковаВ.В., ШиловскаяМ.С. Анализ раскрытия информации в корпоративной отчетности на соответствие первому принципу интегрированной отчетности «Стратегический фокус и ориентация на будущее» // Экономический анализ: теория и практика. 2017. № 5. С. 919-934.
11. Loughran T., McDonald B. Trust, but Verify: MD&A Language and the Role of Trust in Corporate Culture // Journal of Business Ethics. 2016. No. 3 (139). Р. 551-561.
