Does Enhanced Disclosure Really Reduce Agency Costs? Evidence from the Value of Corporate Cash Holdings and Dividends
In this paper, we examine investors valuations of corporate cash hoardings and dividend payout to explicitly isolate the monitoring effect from the information effect of corporate disclosure activity. In a sample of 951 firms from 38 countries, we find that cash resources are rewarded with higher market valuation when greater disclosure improves a firms transparency. These results suggest that extensive disclosure enhances external monitoring and thus limits insiders ability to accumulate cash to expropriate minority shareholders. In further support of the monitoring effect of strong disclosure, we find that dividend payout is valued at a premium in opaque firms where cash is more vulnerable to consumption of private control benefits. Overall, our findings support the disciplinary role of firm-level disclosure policy in corporate governance mechanisms.
Corporate disclosure Corporate governance Cash holdings Dividends Transparency
Pinghsun Huang Yan Zhang
College of Management,National Cheng Kung University,Tainan 701,Taiwan School of Management,SUNY at Binghamton,Binghamton,NY 13902,USA
国际会议
大连
英文
1-36
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）