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Value Reporting Quality, Operating Performance, and Stock Market Valuations

64 Pages Posted: 6 Jul 2011 Last revised: 13 Oct 2015

Florian Eugster

Stockholm School of Economics

Alexander F. Wagner

University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute

Date Written: October 12, 2015

Abstract

Going beyond just requiring more disclosure, the concept of "Value Reporting" emphasizes the idea that it may be in firms' own interest to provide investors and other stakeholders with a holistic picture of their value generation activities. Using an index of value reporting quality (VRQ) that was explicitly designed to capture variation in value reporting among firms, we document, using more than a decade of data, that firms with better VRQ deliver better future operating performance, obtain greater economic value added, and exhibit higher valuation ratios. These results hold controlling for firm fixed effects as well as with two instrumental variables approaches. In recent years, stock prices appear to incorporate the notion that value reporting supports value generation.

Keywords: Value Reporting, voluntary disclosure quality, operating performance, portfolio analysis, disclosure

JEL Classification: G11, G14, M41

Suggested Citation

Eugster, Florian and Wagner, Alexander F., Value Reporting Quality, Operating Performance, and Stock Market Valuations (October 12, 2015). Swiss Finance Institute Research Paper No. 11-25. Available at SSRN: https://ssrn.com/abstract=1879804 or http://dx.doi.org/10.2139/ssrn.1879804

Florian Eugster

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Alexander F. Wagner (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Zürich, 8032
Switzerland
+41 44 634 3963 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Swiss Finance Institute ( email )

Switzerland

HOME PAGE: http://www.alex-wagner.com

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