Value relevance of voluntary disclosure and the global financial crisis: evidence from China

Value relevance of voluntary disclosure and the global financial crisis: evidence from China Purpose – The purpose of this study is to examine whether the level of voluntary disclosure affects firm value in the Chinese capital market. It also investigates whether voluntary disclosure and the values of Chinese firms are influenced by the global financial crisis (GFC). Design/methodology/approach – The study used a sample of 714 firm‐year annual reports of listed companies on the Shanghai and Shenzhen Stock Exchanges over a period of five years from 2005 to 2009 and adopt a two‐stage OLS (2SLS) procedure. Findings – It is found that the extent of voluntary disclosure has improved in China during the period studied. The multiple regression results indicate that more voluntary disclosure does not create value for Chinese firms. It is also observed that multinational ownership, non‐executive directors, and audit committee presence are positively and significantly associated with voluntary disclosure. Furthermore, the study reports that state and individual ownerships are negatively associated with firm value while multinational ownership and liquidity have a positive significant association with firm value. During the financial crisis, voluntary disclosure continues to increase, however, firm value has decreased. Originality/value – Using data from the Chinese market, the study fills a research gap by examining the value relevance of voluntary disclosure and tests whether the Global Financial Crisis has influenced voluntary disclosure levels and Chinese firms' values. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

Value relevance of voluntary disclosure and the global financial crisis: evidence from China

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0268-6902
DOI
10.1108/02686901311327218
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this study is to examine whether the level of voluntary disclosure affects firm value in the Chinese capital market. It also investigates whether voluntary disclosure and the values of Chinese firms are influenced by the global financial crisis (GFC). Design/methodology/approach – The study used a sample of 714 firm‐year annual reports of listed companies on the Shanghai and Shenzhen Stock Exchanges over a period of five years from 2005 to 2009 and adopt a two‐stage OLS (2SLS) procedure. Findings – It is found that the extent of voluntary disclosure has improved in China during the period studied. The multiple regression results indicate that more voluntary disclosure does not create value for Chinese firms. It is also observed that multinational ownership, non‐executive directors, and audit committee presence are positively and significantly associated with voluntary disclosure. Furthermore, the study reports that state and individual ownerships are negatively associated with firm value while multinational ownership and liquidity have a positive significant association with firm value. During the financial crisis, voluntary disclosure continues to increase, however, firm value has decreased. Originality/value – Using data from the Chinese market, the study fills a research gap by examining the value relevance of voluntary disclosure and tests whether the Global Financial Crisis has influenced voluntary disclosure levels and Chinese firms' values.

Journal

Managerial Auditing JournalEmerald Publishing

Published: May 17, 2013

Keywords: Value relevance; Voluntary disclosure; Global financial crisis; Capital markets; China

References

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