Corporate Governance, Companies’ Disclosure Practices, and Market Transparency: A Cross Country Study

Journal of Business Finance and Accounting, Forthcoming

52 Pages Posted: 1 Sep 2012 Last revised: 18 Dec 2015

Wendy Beekes

Lancaster University - Department of Accounting and Finance

Philip R. Brown

UWA Business School, M250; Financial Research Network (FIRN)

Wenwen Zhan

Lancaster University

Qiyu Zhang

Lancaster University Management School

Multiple version iconThere are 2 versions of this paper

Date Written: December 17, 2015

Abstract

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.

Keywords: Corporate Governance, Disclosure Practices, Market Transparency, Legal Origin, Timeliness of Price Discovery

JEL Classification: G30, G38, M40

Suggested Citation

Beekes, Wendy and Brown, Philip R. and Zhan, Wenwen and Zhang, Qiyu, Corporate Governance, Companies’ Disclosure Practices, and Market Transparency: A Cross Country Study (December 17, 2015). Journal of Business Finance and Accounting, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2139641 or http://dx.doi.org/10.2139/ssrn.2139641

Wendy Beekes (Contact Author)

Lancaster University - Department of Accounting and Finance ( email )

Lancaster LA1 4YX
United Kingdom
++44 (0)1524 593623 (Phone)

Philip R. Brown

UWA Business School, M250 ( email )

Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Wenwen Zhan

Lancaster University ( email )

Lancaster LA1 4YX
United Kingdom

Qiyu Zhang

Lancaster University Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

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