The value relevance of disclosure: Evidence from the emerging capital market of Egypt

By Omaima A. G. Hassan, P. Romilly, G. Giorgioni, D. Power. 2009

300 citations recorded by the source corpus.

This study examines the value of voluntary and mandatory disclosure in a market that applies International Accounting Standards (IAS) with limited penalties for non compliance. The lack of enforcement creates an element of choice in the level of mandatory disclosure by companies. Using panel-data analysis, our empirical results show that, after controlling for factors such as asset size and profitability, mandatory disclosure has a highly significant but negative relationship with firm value. This result, although puzzling from a traditional perspective, is consistent with the predictions of analytical accounting models, which emphasize the complex interplay of factors determining disclosure effects. Our results also show that voluntary disclosure has a positive but insignificant association with firm value. This lack of statistical significance supports the view that there is a complex interplay of different factors determining the relationship between disclosure and firm value.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/4e0496bec29420109f1bd12ea2bc8a237f76bf65

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Citations in the corpus

Accruals and the prediction of future cash flows (2011, background): “Therefore, the importance of earnings for market pricing is very high and functional fixation on earnings is very common in stock pricing ( Hassan et al. , 2009”
Aggregated, Voluntary and Mandatory Risk Disclosure Incentives: Evidence from UK FTSE All Share Companies (2013, methodology): “Measuring aggregated, voluntary and mandatory risk disclosures using automated content analysis Previous research has used content analysis to measure corporate disclosure levels (e.g., Botosan, 1997; Botosan and Plumlee, 2002; Beattie et al., 2004, 2008; Hassan et al., 2009; Kothari et al., 2009).”
Corporate Boards, Ownership Structures and Corporate Disclosures: Evidence from a Developing Country (2018, unknown): “The multiple regression model employed is as follows:”
Disclosure Measurement in the Empirical Accounting Literature - A Review Article (2010, methodology): “…of items of information to be included in a selfconstructed disclosure index is subject to judgment, another potential limitation of using a disclosure index to measure level of disclosure is that the results are only valid to the extent that the index used is appropriate (Hassan et al., 2009).”
The extent of voluntary disclosure and its determinants in emerging markets: Evidence from Egypt (2017, background): “U S C EXTVDIS: Overall Extent Voluntary Disclosure Index (Percent of overall applicable CG disclosure items supplied/satisfied); SIZE: Firm size (Natural logarithm of total assets); ROA: Firm Profitability (Ratio of net income to total assets); LEVRG: Firm Leverage (Long-term debt/ capital equity); ”
Intellectual capital disclosure, cost of finance and firm value (2009, background): “Hassan et al. (2009) state that disclosure is a mechanism to mitigate agency costs arising from the possibility that managers may not act in the best interest of shareholders.”
Is forward-looking financial disclosure really informative? Evidence from UK narrative statements (2015, background): “This procedure ensures that stock prices capture the new information released by change in FLFD (Hassan et al., 2009).”
Economic Consequences of Key Performance Indicators' Disclosure Quality (2015, unknown): “Thus, enhanced disclosure might lead to an increase in the demand for a company’s share and in turn the share’s price (Clarkson et al., 1996; Hassan et al., 2009) because the disclosure should correct any firm misevaluation (Healy et al.”
Association between firm characteristics and corporate voluntary disclosure: evidence from Turkish listed companies (2013, background): “Thus, managers are expected to disclose more information to reduce agency costs (Hossain et al., 1995; Watson et al., 2002; Marston, 2003; Oyelere et al., 2003; Marston & Polei, 2004; Barako, Hancock & Izan, 2006; Hassan, Giorgioni, Romilly & Power, 2009).”