Investors' Interpretations of the October 15, 2002 Standard & Poors Transparency & Disclosure Rankings

26 Pages Posted: 14 Apr 2003

See all articles by Agnes Cheng

Agnes Cheng

Hong Kong Polytechnic University; University of Oklahama

Denton Collins

Texas Tech University - Rawls College of Business

Henry He Huang

Yeshiva University - Sy Syms School of Business

Date Written: January 2006

Abstract

This paper investigates whether the Standard & Poors (S&P) transparency and disclosure (T&D)rankings informed the financial markets with respect to firms' corporate governance and disclosure practices when the results of the study were released by S&P on October 15, 2002. The S&P T&D rankings report the relative levels of three disclosure dimensions (ownership structure and investor rights, financial transparency and information disclosure, and board and management structure and process) provided by firms in their annual reports (annual report rankings) and complete regulatory filings (composite rankings). The results suggest that the S&P T&D rankings provided new information to the markets on cross-sectional differences in disclosure, and the market responds unfavorably during the event period to firms with large difference in disclosure levels across annual report and other regulatory filings. Further analyses reveal that the results are driven by the subcategory of ownership structure and investor rights.

Keywords: transparency, disclosures, corporate governance, earning quality, Standard & Poors

JEL Classification: G14, G34, M41, M45

Suggested Citation

Cheng, Agnes and Collins, Denton and Huang, Henry, Investors' Interpretations of the October 15, 2002 Standard & Poors Transparency & Disclosure Rankings (January 2006). Available at SSRN: https://ssrn.com/abstract=369561 or http://dx.doi.org/10.2139/ssrn.369561

Agnes Cheng (Contact Author)

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

University of Oklahama ( email )

307 West Brooks
Norman, OK 73019-4004
United States

Denton Collins

Texas Tech University - Rawls College of Business ( email )

School of Accounting
Lubbock, TX 79409
United States

Henry Huang

Yeshiva University - Sy Syms School of Business ( email )

New York, NY 10033
United States

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