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Capital market development and confidence in disclosure quality

54 Pages Posted: 1 Apr 2015 Last revised: 23 Jan 2017

Henry L. Friedman

University of California, Los Angeles (UCLA) - Accounting Area

Date Written: January 15, 2017

Abstract

High quality disclosures can promote investor confidence and facilitate capital market development, but evidence on market-level consequences of confidence associated with disclosures is sparse. Using a survey-based measure that directly captures beliefs about disclosure quality in a panel with over 1,000 country-year observations, this study examines macro-level capital market consequences of confidence in disclosure quality. Evidence from panel regressions controlling for country effects, prior levels of market development, and other plausible determinants suggests that more positive beliefs about disclosure quality are associated with subsequently more active stock markets and larger credit markets, but not with larger equity markets. The results provide mixed support for prior studies suggesting positive effects of confidence and disclosure quality on capital market development.

Keywords: confidence; disclosure quality; equity market development; credit market development

JEL Classification: E22, G15, G18, G38, M41, M42, M48

Suggested Citation

Friedman, Henry L., Capital market development and confidence in disclosure quality (January 15, 2017). Available at SSRN: https://ssrn.com/abstract=2587403 or http://dx.doi.org/10.2139/ssrn.2587403

Henry L. Friedman (Contact Author)

University of California, Los Angeles (UCLA) - Accounting Area ( email )

D416 Anderson Complex
Los Angeles, CA 90095-1481
United States

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