Determinants of information disclosure by Spanish state-owned enterprises in accordance with legal requirements

• Pages: 616-634
• Published date: 02 August 2019
• Date: 02 August 2019
• DOI: https://doi.org/10.1108/IJPSM-06-2018-0147
• Author: Javier Andrades,Domingo Martinez-Martinez,Manuel Larrán,Jesus Herrera
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

Determinants of information

disclosure by Spanish state-owned

enterprises in accordance with

legal requirements

Javier Andrades, Domingo Martinez-Martinez, Manuel Larrán and

Jesus Herrera

Department of Finance and Accounting, Universidad de Cadiz, Cadiz, Spain

Abstract

Purpose –The purpose of this paper is to examine how different variables can affect the amount of

information reported by Spanish enterprises owned by the central state as well as by local and regional

governments, all categorized as state-owned enterprises (SOEs).

Design/methodology/approach –Using, as a reference, the obligations of information disclosure

contained in the Spanish Law 19/2013 on Transparency and Good Governance, the authors performed a

web-content analysis of web pages of all Spanish SOEs and the authors examined a sample of Spanish

enterprises owned by regional and local governments.

Findings –The results show that the amount of information reported by Spanish SOEs is quite reduced and

limited. Among the variables examined, the most influential ones for explaining the amount of information

reported are the nature of public ownership and the institutional size.

Originality/value –This study contributes to the literature by exploring the potential determinants of the online

disclosure of mandatory information reported by enterprises whose ownership is shared by private and public

organizations. Thus, this research could help public managers make decisions and improve public confidence.

Keywords State-owned enterprises, Legitimacy, Stakeholders, Information disclosure, Transparency

Paper type Research paper

Introduction

The credibility of the public sector entities has been damaged by recent financial scandals

and different corruption cases (Guillamón et al., 2011; Saéz-Martín et al., 2017). In such

regard, different authors have noted that information disclosure practices implemented by

public entities are positively associated with increased efficiency, performance and

confidence among citizens (Sokol, 2010; Royo et al., 2017). Compared to the private sector,

entities of the public sector are called to be more accountable with different stakeholders

because they are publicly funded (Greiling et al., 2015). Also, such organizations are required

to demonstrate public confidence and credibility (Grossi and Thomasson, 2015).

In relation to this, the concept of transparency has gained a top position in the public

sector accounting discourse (Lapsley and Ríos, 2015). Conceptually, the OECD (2001)

defined this term as “a full disclosure of all relevant information in a timely manner.”Ball

(2009) configured the transparency term from a triple perspective: first, transparency

conceived as a means of reducing corruption, since this approach is associated with

accountability; second, transparency understood as a process of open decision making by

public entities; and third, transparency as a key element of good governance. From a

broader perspective, Bovens (2007) has manifested that accountability means “a (social)

relationship between an actor and a forum, in which the actor has an obligation to explain

and to justify his or her conduct, the forum can pose questions and pass judgement, and the

actor may face consequences”(p. 450).

From the set of entities that make up the public sector, enterprises that are owned in

large part by public administration or full managed by such administration represent a

International Journal of Public

Sector Management

Vol. 32 No. 6, 2019

pp. 616-634

© Emerald PublishingLimited

0951-3558

DOI 10.1108/IJPSM-06-2018-0147

Received 22 June 2018

Revised 24 October 2018

18 February 2019

3 April 2019

Accepted 3 April 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

616

IJPSM

32,6

good case for study because they have to balance two diverging goals: create value to the

society and achieve benefits (Khongmalai et al., 2010; Greiling et al., 2015). State-owned

enterprises (SOEs), which is the term most commonly used (Bruton et al., 2015; Grossi et al.,

2015), are those “enterprises where the state, regional governments or cities have significant

control, through full, majority or significant minority ownership.”This definition includes

that SOEs are enterprises whose public ownership may reside in the central, regional or

local government(s) as well as is shared with private organizations (Bruton et al., 2015;

Swiatczak et al., 2015). Under such premises, emerges the concept of a hybrid organization,

which is “said to be market oriented and it operates in a business-like manner to provide

public services with public funding and is politically governed”(Grossi et al., 2015, p. 275).

According to the existing academic literature, there are several arguments that justify

why the amount of information reported by SOEs should be examined. First, and from an

international view, enterprises publicly owned play a pivotal role in today’s global economy

and, as a consequence, they are called to be accountable to society (Sokol, 2010); second,

SOEs are hybrid institutions operating between the market and the public sector; this

entails having to manage financial and non-financial goals and meeting informational needs

of a broad and heterogeneous group of stakeholders (Grossi and Thomasson, 2015). Third,

few studies to date have been conducted to examine the amount of information reported by

SOEs (Garde et al., 2017; Royo et al., 2017). Most of the literature on the public sector

accounting research has analyzed the amount of information voluntarily disclosed by local

governments (García-Sánchez et al., 2013), public utilities (Papenfuß et al., 2015) and public

universities (Gallego et al., 2011).

The Spanish case represents a good opportunity to study the level of transparency of

SOEs. In the 1980s and 1990s, the Spanish Government, in response to the pressure from the

European Union to reduce public deficit, privatized the public business sector (Cuadrado

and Carrillo, 2008). Nevertheless, the recent trend has been the excessive creation of Spanish

SOEs with the aim of avoiding control imposed by administrative regulation and the

assumption that such institutions can benefit from private legislation in regard to the

preparation of their financial statements (Fernández, 2005; Cuadrado and Carrillo, 2008). In

addition to this, in 2013, the Spanish Government approved a regulation on transparency for

public sector organizations, requiring SOEs with a proportion of public ownership higher

than 50 percent to report on institutional, planning and economic issues. The hybrid profile

of these institutions between the public and the private sectors would be a compelling

reason to examine why Spanish SOEs reveal or do not reveal information as well as which

influential variables explain such patterns. Another reason to examine SOEs in Spain is the

proliferation of public corruption cases that has resulted in Spanish citizens becoming more

aware of how public resources are being managed by governments and their dependent

entities (García-Tabuyo et al., 2016). From this, it is assumed that entities of the public sector

are more concerned with information disclosure policies (Alcaraz et al., 2014; Brun-Martos

and Lapsley, 2016). Also, the academic literature on the public sector accounting research in

Spain has been mainly focused on examining the amount of voluntarily reported

information by local governments and universities (Gallego et al., 2011; Garde et al., 2013;

Alcaraz et al., 2014).

Taking into accountthe previous considerations,the main goal of this paper is to examine

how different variables can affect theamount of information reported by Spanish enterprises

owned by the centralstate as well as by local and regional governments(all categorized under

the term SOE). We performed a web-content analysis of institutional sites of all Spanish

enterprises owned by the central state and we examined a sample of Spanish enterprises

owned by regionaland local governments. Different authors emphasized thatthe internet, an

instrument cheaper and faster than hard-copy documents,is an online platform that multiple

public institutions use to report different types of information (Castelo and Lima, 2008).

617

Determinants

of information

disclosure