What You Say and How You Say It: Information Disclosure in Latin American Firms

38 Pages Posted: 14 Apr 2019

See all articles by Maximiliano Gonzalez

Maximiliano Gonzalez

Universidad de los Andes; Universidad de los Andes, Colombia - School of Management

Alexander Guzmán

CESA School of Business

Diego Téllez

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF)

Maria-Andrea Trujillo

CESA School of Business

Date Written: March 22, 2019

Abstract

Firms in Latin America could differentiate themselves by adopting better information disclosure practices. In this paper, we construct an Information Disclosure Index (IDI) for a sample of 454 firms in the six largest Latin America countries. We look at 3.191 company reports and show that firms with better disclosure practices have better market valuation (Tobin’s Q) and operating performance (ROE). We then measure the tone of the information disclosed using word content analysis, and find that uncertainty in tone is negatively associated with higher firm valuation (Tobin’s Q) and better financial performance (ROE).

Keywords: Disclosure, Content Analysis, Corporate Governance, Firm Value

JEL Classification: G15, G34

Suggested Citation

Gonzalez, Maximiliano and Guzman, Alexander and Téllez, Diego and Trujillo, María-Andrea, What You Say and How You Say It: Information Disclosure in Latin American Firms (March 22, 2019). Center for Research in Economics and Finance (CIEF), Working Papers, No. 17-05, Available at SSRN: https://ssrn.com/abstract=2929833 or http://dx.doi.org/10.2139/ssrn.2929833

Maximiliano Gonzalez (Contact Author)

Universidad de los Andes ( email )

Calle 21 No. 1-20
Costado Occidental
Bogotá, AK Cundinamarca 1
Colombia
573144869255 (Phone)

Universidad de los Andes, Colombia - School of Management ( email )

Carrera Primera # 18A-12
Bogotá
Colombia

Alexander Guzman

CESA School of Business ( email )

Bogota
Colombia

Diego Téllez

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF) ( email )

Carrera 49 No. 7 South - 50
Medellin
Colombia

María-Andrea Trujillo

CESA School of Business ( email )

Bogota
Colombia

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