Shiue, M. J., Tseng, C. H., and Chiou, Y. Y. 2018. The Influence of Information Disclosure Transparency and Transparency Rankings on Earnings Informativeness and Future Earnings. NTU Management Review, 28 (3): 47-82. https://doi.org/10.6226/NTUMR.201812_28(3).0002
Min-Jeng Shiue, Department of Accountancy, National Taipei University
Chien-Hao Tseng, Department of Insurance and Financial Management, Takming University of Science and Technology
Yan-Yi Chiou, Department of Financial Management, National Defense University
Abstract
This study examines how firm disclosure activity affects the relationship between annual stock returns and changes in annual earnings. This study uses the Taiwanese Information Disclosure and Transparency Ranking System (IDTRS) as a proxy for disclosure activity, and samples were collected from Taiwanese publicly traded firms between 2005 and 2010. Our results show that the informativeness of accounting earnings is stronger for firms ranking higher in transparency than for other firms. In addition, we find that changes in disclosure activity are incrementally positively related to changes in current earnings for returns, and that disclosure activity is significantly and positively associated with firms' future performance, though changes in disclosure activity is not. Last, the results show that disclosure activity is positively and significantly associated with the comparability of firms' future financial reports.
Keywords
information transparencyinformation disclosure and transparency ranking systemearnings informativeness