Submitted manuscript, 329 KB, PDF document
Research output: Working paper
Research output: Working paper
}
TY - UNPB
T1 - Corporate governance, companies’ disclosure practices, and market transparency
T2 - a cross country study
AU - Beekes, Wendy
AU - Brown, Philip
AU - Zhan, Wenwen
AU - Zhang, Qiyu
PY - 2015/10/8
Y1 - 2015/10/8
N2 - We examine the link between corporate governance, companies’ disclosure practices and their equity market transparency in a study of more than 5,000 listed companies in 23 countries covering the period 1 January 2003 to 31 December 2008. Our results confirm the belief that better-governed firms make more frequent disclosures to the market. We also find greater disclosure in common law relative to code law countries. However firms with better governance in both code and common law countries make more frequent disclosures. We measure market transparency by the timeliness of prices. In contrast to single country studies, results show, for the 23 countries collectively, better corporate governance is associated with less timely share prices. This would suggest that a firm substitutes better corporate governance for transparency. We are thus led to the conclusion that even if information is disclosed more frequently by better-governed firms, it does not necessarily follow that information is reflected in share prices on a timelier basis.
AB - We examine the link between corporate governance, companies’ disclosure practices and their equity market transparency in a study of more than 5,000 listed companies in 23 countries covering the period 1 January 2003 to 31 December 2008. Our results confirm the belief that better-governed firms make more frequent disclosures to the market. We also find greater disclosure in common law relative to code law countries. However firms with better governance in both code and common law countries make more frequent disclosures. We measure market transparency by the timeliness of prices. In contrast to single country studies, results show, for the 23 countries collectively, better corporate governance is associated with less timely share prices. This would suggest that a firm substitutes better corporate governance for transparency. We are thus led to the conclusion that even if information is disclosed more frequently by better-governed firms, it does not necessarily follow that information is reflected in share prices on a timelier basis.
KW - Corporate Governance
KW - Disclosure Practices
KW - Market Transparency
KW - Legal Origin
KW - Timeliness of Price Discovery
M3 - Working paper
SP - 1
EP - 51
BT - Corporate governance, companies’ disclosure practices, and market transparency
PB - Lancaster University
CY - Lancaster
ER -