Invaluable guidance for complete integration of sustainability into reporting and performance management systems Global businesses are under close scrutiny from lawmakers, regulators, and their diverse stakeholders to focus on sustainability and accept responsibility for their multiple bottom line performance. Business Sustainability and Accountability examines business sustainability and accountability reporting and their integration into strategy, governance, risk assessment, performance management and the reporting process. This book also highlights how people, business and resources collaborate in a business sustainability and accountability model. Looks at business sustainability and accountability reporting and assurance and their incorporation into the reporting process Focuses on how the business sustainability and accountability model are impacted by the collaboration of people, business, and resources Presents laws, rules, regulations, standards and best practices relevant to business sustainability performance, reporting and assurance Organizations worldwide recognize the importance of all five EGSEE dimensions of sustainability performance and accountability reporting. However, how to actually assess sustainability risk, implement sustainability reporting, and obtain sustainability assurance remain a major challenge and best practices are evolving. Straightforward and comprehensive Business Sustainability and Accountability hits on all of the hottest topics around sustainability including multiple bottom line (EGSEE) performance and reporting, related financial and non-financial key performance indicators (KPIs), business social responsibility and environmental reporting.

New research suggests that cross-country differences in legal origin help explain differences in financial development. This paper empirically assesses two theories of why legal origin influences financial development. First, the political' channel stresses that (i) legal traditions differ in the priority they give to the rights of individual investors vis- ...-vis the state and (ii) this has repercussions for the development of property rights and financial markets. Second, the adaptability' channel holds that (i) legal traditions differ in their ability to adjust to changing commercial circumstances and (ii) legal systems that adapt quickly to minimize the gap between the contracting needs of the economy and the legal system's capabilities will foster financial development more effectively than would more rigid legal traditions. We use historical comparisons and cross-country regressions to assess the validity of these two channels. We find that legal origin matters for financial development because legal traditions differ in their ability to adapt efficiently to evolving economic conditions.

The study analysed the relationship between accounting disclosure, both mandatory and voluntary, on the cost of equity capital for listed companies in the Egyptian exchange. The focus is on analysing this relationship in one of the emerging capital markets where there is a paucity of research analysing this issue. To achieve this aim, two self-constructed disclosure indices for mandatory and voluntary disclosure were used to measure the level of disclosure in Egypt. The cost of equity capital was measured based on three methods identified in the literature, namely the capital asset pricing model (CAPM), the Fama-French three factor model, and the industrial earnings-price ratio. To analyse the effect of accounting disclosure on the cost of equity capital, each of the cost of equity measurement methods was regressed on mandatory and voluntary disclosure scores, alternatively, and some controls that are identified in the literature to affect the association between the two variables. The control variables used were firm size, leverage, book-to-market ratio, profitability, liquidity, and sales growth. As a robustness check, a composite measure of the three cost of equity methods was used and the effect of the control variables was excluded from the analyses. To control for the existent endogeneity in the explanatory variable, accounting disclosure, a dynamic panel system of the generalized method of moments (SGMM) was used in the regression analyses. Using a sample of 657 firm year observations for 73 firms across 11 industries for nine years from 2008 to 2016, the study found a significant negative association between voluntary disclosure level and cost of equity capital, however, the study found a significant positive association between mandatory disclosure level and cost of equity capital. The results of the study could benefit various parties including researchers, regulators, and investors. It provides a motivation to researchers interested in analysing this association in Egypt and other emerging markets besides providing these researchers with a suitable data set to measure disclosure and cost of equity capital in Egypt. Regulators could benefit from the results of the study through identifying the shortcomings that need to be overcome to improve the disclosure environment in Egypt. Investors could use the results of the study as a data source in making investment decisions in Egypt.

The bias implied by conservatism in accounting and its impact on information risk in equity markets is the subject of considerable debate. On one hand, opponents of conservatism believe that any kind of biased information is actually misinformation and thus increases uncertainty. Perhaps most prominent among opponents of conservatism is the Financial Accounting Standards Board (FASB). The FASB contends that accounting information should be neutralfree from bias; a bias in favor of reporting either good or bad news is inconsistent with representational faithfulness and neutrality. On the other hand, proponents of conservatism point to incentives of management to manipulate financial statements by exaggerating apparent good news and/or hiding apparent bad news. Proponents argue that the bias implied by conservatism is necessary to offset the asymmetric reporting incentives of the firms management, and in so doing, conservatism allegedly improves information quality and reduces information risk. Finally, results of at least one recent study do not favor either position, suggesting that conservatism has no effect on information quality in equity market. This study finds that the bias implied by conservatism (bias in favor of reporting bad news) increases information risk in equity markets and consequently the cost of equity capital. Findings further indicate that sufficiently aggressive bias also increases information risk. That is, the markets most aggressive firms, those reporting with a bias opposite that implied by conservatism, can reduce information risk by moving toward more neutral, unbiased reporting. Furthermore, the general effects of biased reporting (increased information risk) are consistent across all levels of information asymmetry among equity investors. These findings are interpreted as supporting the position of the FASB that biased accounting information increases information risk.

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.