Voluntary Disclosure and Firm Valuation

A recent research performed by one of our faculty members, Yanthi Hutagaol-Martowidjojo, aims to examine the relationship between voluntary disclosure and firm valuation. This is an interesting topic, as companies put a lot of effort to prepare their disclosure section in the annual report, so they should wonder whether it actually gives a positive impact on them. The voluntary disclosure level was measured by a modified Botosan index, whereas share price was chosen to measure firm valuation. The research result indicates that market does positively value the voluntary disclosure made by firms. Further analysis shows three voluntary disclosure categories that act as main value-drivers, i.e. key non-finance statistics, R&D activities and value-added disclosures.

Full paper can be accessed here 

(YH)