Transparency Regulation and Stock Price Informativeness: Evidence from the European Union's Transparency Directive

Date
2019-07-01
Authors
Watanabe, Olena
Imhof, Michael
Watanabe, Olena
Tartaroglu, Semih
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Altmetrics
Authors
Research Projects
Organizational Units
Accounting
Organizational Unit
Journal Issue
Series
Department
Accounting
Abstract

We examine changes in stock price informativeness following the European Union's Transparency Directive (TPD). The TPD, implemented by country between 2007 and 2009, enhanced corporate transparency through mandating regular firm financial disclosures and facilitating the dissemination of financial reports. Using stock return synchronicity as a proxy for stock price informativeness, we find that price informativeness improved following implementation of the TPD. This improvement was more pronounced in countries with strong regulatory environments than those with weak regulatory environments. We additionally examine a later amendment to the TPD that eliminated the requirement of quarterly financial disclosures and document an increase in stock return synchronicity following the amendment. Our findings support prior research suggesting that transparency regulations improve financial information.

Comments

This accepted article is published as Olena V. Watanabe, Michael J Imhof, and Semih Tartaroglu (2019) Transparency Regulation and Stock Price Informativeness: Evidence from the European Union's Transparency Directive. Journal of International Accounting Research: Summer, Vol. 18, No. 2, pp. 89-113. Doi: 10.2308/jiar-52383. Posted with permission

Description
Keywords
Citation
DOI
Collections