Can Information Transparency Improve Earnings Quality Attributes? Evidence from an Enhanced Disclosure Regime in Taiwan

Yaying Yeh, Hui-Wen Chen and Mei-Ching Wu

Emerging Markets Finance and Trade, 2014, vol. 50, issue 4, 237-253

Abstract: Investors demand timely and accurate corporate disclosures in order to comprehend the governance and performance of a firm; they also rely on quality earnings information to assess the intrinsic value of a company. This study links the two using a Taiwan sample because the government of Taiwan has just performed a market-wide corporate-transparency rating. We find significant improvement on four accounting-based earnings-quality attributes, including accrual quality, earnings persistence, predictability, and smoothness. Further, there is a statistically reliable association between the level of information transparency and each of these earnings attributes, implying that a disclosure mechanism design can enhance management accountability in financial reporting.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:50:y:2014:i:4:p:237-253

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DOI: 10.2753/REE1540-496X500414

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