Corporate Disclosure, Compliance and Consequences: Evidence from Russia

70 Pages Posted: 9 Aug 2018 Last revised: 9 Sep 2021

See all articles by Suman Banerjee

Suman Banerjee

Stevens Institute of Technology; Stevens Institute of Technology

Saul Estrin

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Sarmistha Pal

University of Surrey; IZA Institute of Labor Economics

Date Written: September 08, 2021

Abstract

Does the introduction of corporate transparency and disclosure rules affect compliance and therefore earnings quality and firm performance in emerging economies? We explore these questions for an important emerging economy, Russia, using a natural experiment, the 2002 introduction of Russian corporate governance code, to exploit the exogenous variation in voluntary disclosure. We find a significant increase in corporate disclosure among the domestic Russian firms over the period 2003-07 when firms gradually adopted some but not all disclosure rules. The immediate effect of the introduction was a drop in reported earnings. Market valuation, however, only improved for domestic firms after 2007, when all domestic firms had to comply. However, cross-listed firms, which were already satisfying international standards, remained largely unaffected. Though average compliance by domestic firms was only 53%, average firm value of treated domestic firms relative to cross-listed ones, went up by about 10%. Results are robust, confirm external validity and offer important policy implications for other emerging/ transition economies.

Keywords: Natural Experiment, 2002 Russian Corporate Governance Code, Earnings Management, Market Valuation, Difference-In-Difference Model, Domestic vs. Cross-Listed Firms, Russia

JEL Classification: G3, K2, O38

Suggested Citation

Banerjee, Suman and Estrin, Saul and Estrin, Saul and Pal, Sarmistha, Corporate Disclosure, Compliance and Consequences: Evidence from Russia (September 08, 2021). Available at SSRN: https://ssrn.com/abstract=3218966 or http://dx.doi.org/10.2139/ssrn.3218966

Suman Banerjee

Stevens Institute of Technology ( email )

525 River Street
Hoboken, NJ 07030
United States
2012613689 (Phone)

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States

Saul Estrin

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sarmistha Pal (Contact Author)

University of Surrey ( email )

Stag Hill
Guildford, England GU2 7XH
United Kingdom
01483 683995 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
48
Abstract Views
1,068
PlumX Metrics