CORPORATE VALUATION SPURRED BY INFORMATION TRANSPARENCY IN AN EMERGING ECONOMY

Tran Thai Ha Nguyen, Wing-Keung Wong, Gia Quyen Phan (), Dang Thanh Minh Tran and Massoud Moslehpour ()
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Tran Thai Ha Nguyen: Department of Business Administration, College of Management, Asia University, Taichung, Taiwan2Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Vietnam
Gia Quyen Phan: University of Economics and Law, Vietnam National University — Ho Chi Minh City, Vietnam
Dang Thanh Minh Tran: Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Vietnam6University of Economics and Law, Vietnam National University — Ho Chi Minh City, Vietnam

Annals of Financial Economics (AFE), 2021, vol. 16, issue 03, 1-21

Abstract: The stock price crash can result from lacking information transparency, especially in emerging economies characterized by weak corporate governance and high volatility. This study approaches corporate information transparency through the crash risk of stock prices on the Vietnamese market, develops a model that reflects the effect of information disclosure on corporate valuation, and employs two-step system generalized method of moments (S-GMM) estimation for panel data to deal with endogenous problems. This paper finds that the crash risk of stock price, referred to as the low level of information disclosure, creates a significantly negative effect on corporate valuation, expressing that information asymmetry causes serious issues for corporate prospects in the context of an emerging economy. Thus, corporates are suggested to enrich their information disclosure through periodic reports as a crucial mechanism to improve their transparency, reduce stock price crash risk, and enhance their valuation. This study also proposes related recommendations to enhance corporate governance and finance supervisory to maintain sustainability in the future.

Keywords: Information transparency; corporate valuation; stock volatility; S-GMM; Vietnam (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S2010495221500111

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