The Impact of Information Transparency on Information Transfer

This paper contributes to the literature on how information transparency affects the intra-industry information transfers. Using data for Taiwanese firms covering the sample period 2005–2010, we separate the company announcements into good and bad news and test three hypotheses regarding how such announcements are transmitted to non–announcing firms under both low and high transparency and in a highly competitive industry setting. The results indicate significant intra–industry information transfers, and the results are sensitive to the degree of information transparency of companies and industry competitiveness. We discuss the policy implications of the findings.