Corporate Textual Transparency and Economic Growth

52 Pages Posted: 1 Apr 2020 Last revised: 16 Feb 2022

See all articles by Minkang Lu

Minkang Lu

Zhongnan University of Economics and Law

Ziwei Qiao

affiliation not provided to SSRN

Hongping Tan

McGill University

Li Yao

Concordia University, Quebec

Date Written: February 16, 2022

Abstract

Using annual corporate filings by firms headquartered around the world, we measure a country’s corporate textual transparency by four linguistic attributes of readability, specificity, non-boilerplate disclosures, and conciseness. We find corporate textual transparency predicts a country’s economic growth for at least two years, especially for countries with weaker institutions. We further document that corporate textual transparency aggregated from textual attributes of statements on both macro-economic conditions and firm fundamentals predicts economic growth. Additional analysis shows that transparent corporate textual disclosure not only facilitates better estimates of corporate prospects but also reduces market-level information asymmetry and perceived uncertainty, thus facilitating economic activities and contributing to economic growth. Our findings suggest that corporate textual transparency is vital for a country’s information environment and conducive to economic growth.

Keywords: Transparency; Textual Attributes; Economic Growth; Institutions; Information Availability; Quality; Uncertainty.

JEL Classification: E00, E01, G18, M41

Suggested Citation

Lu, Minkang and Qiao, Ziwei and Tan, Hongping and Yao, Li, Corporate Textual Transparency and Economic Growth (February 16, 2022). Available at SSRN: https://ssrn.com/abstract=3549968 or http://dx.doi.org/10.2139/ssrn.3549968

Minkang Lu

Zhongnan University of Economics and Law ( email )

No.143, Wuluo Road
Wuhan, Hubei 430073
China

Ziwei Qiao

affiliation not provided to SSRN

Hongping Tan (Contact Author)

McGill University ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Li Yao

Concordia University, Quebec ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1MB
Canada

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