What Determines Corporate Transparency?
Robert M. Bushman
University of North Carolina Kenan-Flagler Business School
Joseph D. Piotroski
Stanford Graduate School of Business
Abbie J. Smith
University of Chicago - Booth School of Business
We investigate corporate transparency, defined as the availability of firm-specific information to those outside publicly traded firms, and viewed as the joint output of multi-faceted systems whose components collectively produce, gather, validate and disseminate information to market participants. We factor analyze an extensive range of measures capturing countries' firm-specific information environments, and isolate two factors interpreted as financial transparency and governance transparency. We investigate whether these factors vary with the countries' legal/judicial regimes and political economies. Our main multivariate result is that the governance transparency factor is primary related to a country's legal/judicial regime, while the financial transparency factor is primarily related to political economy.
Number of Pages in PDF File: 50
Keywords: corporate transparency, international accounting, corporate governance, disclosure, law, political economy
JEL Classification: G15, G34, K22, M41, M45, M47
Date posted: August 30, 2003