Corporate Textual Disclosure and Economic Growth

48 Pages Posted: 1 Apr 2020

See all articles by Minkang Lu

Minkang Lu

Zhongnan University of Economics and Law

Hongping Tan

McGill University

Li Yao

Concordia University, Quebec

Date Written: March 6, 2020

Abstract

Using proxies for the textual disclosure quality of Form 20-F filings by firms from 28 countries cross-listed in the U.S., we find that aggregate corporate textual disclosure quality predicts a country’s economic growth for up to two years, even after controlling for aggregate earnings growth and other macroeconomic indicators. The predictability of aggregate textual disclosure quality is more pronounced for home countries with weak institutions. Additional analyses suggest that textual disclosure quality enhances the informativeness of earnings and conveys information regarding operational activities, both of which help predict future economic growth. Our findings suggest that aggregate textual disclosure quality of firms from a given country serves as a leading indicator for economic growth in that country.

Keywords: Textual Disclosure Quality, Earnings Persistence, Operational Activities, Economic Growth, Institutions

JEL Classification: E00, E01, G18, M41

Suggested Citation

Lu, Minkang and Tan, Hongping and Yao, Li, Corporate Textual Disclosure and Economic Growth (March 6, 2020). 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

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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