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Can Information Transparency Improve Earnings Quality Attributes? Evidence from an Enhanced Disclosure Regime in Taiwan

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  • Yaying Yeh
  • Hui-Wen Chen
  • Mei-Ching Wu

Abstract

Investors demand timely and accurate corporate disclosures in order to comprehend the governance and performance of a firm; they also rely on quality earnings information to assess the intrinsic value of a company. This study links the two using a Taiwan sample because the government of Taiwan has just performed a market-wide corporate-transparency rating. We find significant improvement on four accounting-based earnings-quality attributes, including accrual quality, earnings persistence, predictability, and smoothness. Further, there is a statistically reliable association between the level of information transparency and each of these earnings attributes, implying that a disclosure mechanism design can enhance management accountability in financial reporting.

Suggested Citation

  • Yaying Yeh & Hui-Wen Chen & Mei-Ching Wu, 2014. "Can Information Transparency Improve Earnings Quality Attributes? Evidence from an Enhanced Disclosure Regime in Taiwan," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(4), pages 237-253.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:4:p:237-253
    DOI: 10.2753/REE1540-496X500414
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    Cited by:

    1. Erlane K. Ghani & Nur Azrin Mat Tarmezi, 2016. "The Effect of Corporate Disclosure Guide on Information Disclosure among Malaysian Public Listed Companies," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(9), pages 362-376, September.
    2. Shen, Huayu & Xiong, Hao & Zheng, Shaofeng & Hou, Fei, 2021. "Chief executive officer (CEO)’s rural origin and internal control quality," Economic Modelling, Elsevier, vol. 95(C), pages 441-452.
    3. Hsu, Yu-Lin & Yang, Ya-Chih, 2022. "Corporate governance and financial reporting quality during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Tran, Ly Thi Hai, 2022. "Reporting quality and financial leverage: Are qualitative characteristics or earnings quality more important? Evidence from an emerging bank-based economy," Research in International Business and Finance, Elsevier, vol. 60(C).

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