Does enhanced disclosure really reduce agency costs? Evidence from the diversion of corporate resources

Pinghsun Huang, Yan Zhang

研究成果: Article

摘要

This study investigates whether extensive disclosure reduces managerial expropriation of corporate resources by examining the potential effects of enhanced reporting on the values of cash assets and investment ventures, respectively. We uncover evidence that liquid asset holdings are valued at a discount by firms with fewer disclosure practices than their more transparent counterparts. Moreover, disclosure activity substantially improves the value of cash assets in excess of requirements for operations and investment. These findings suggest that detailed reporting facilitates the scrutiny and discipline of capital markets, thus preventing the diversion of cash reserves. In further support of the disciplinary power of greater disclosure, we find that valuedestroying projects, through internal capital investment and external acquisitions, are concentrated in firms adopting opaque disclosure policies. Collectively, our results support the premise that extensive disclosure impairs insiders' abilities to utilize corporate resources in a self-serving manner.

原文English
頁面199-229
頁數31
65
5
專業出版物ATIP. Association Technique de L'Industrie Papetiere
出版狀態Published - 2012 二月 1

All Science Journal Classification (ASJC) codes

  • Media Technology

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