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Impact of Financial Transparency on SMEs’ Value

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  • Andrea Quintiliani

Abstract

This study aims at investigating the effects of financial transparency on SMEs’ value. The main purpose of research work is to test hypothesis that there is no significant relationship between financial transparency and SME value improvement as indicated by interest coverage ratio and Tobin Q. Agency theory is a useful framework for designing financial transparency tools. Further the study applied census survey for one hundred twenty-eight SMEs listed in AIM Italia. The time under study was from 2014 to 2018. Out of the 128 listed SMEs targeted, 115 were analyzed forming 90% of the population. Financial transparency index (FTI) was developed as proxy measures of variables. Regression analysis and correlation analysis have been applied to test the hypotheses. Key study variables of SMEs are subject to descriptive statistics. The results suggest a positive and significant relationship between the variables. Greater financial transparency allows SMEs to reduce information asymmetries and optimize their capital structure. This research work has applied important mechanism in FTI to examine the effect of financial transparency on SME value which has provided new insight on the relationship thereby enriching the finding.  JEL classification numbers: C30, G20, G30, G39 Keywords: Financial transparency, SME value, Agency theory, Information asymmetries, Tobin Q, Capital structure.

Suggested Citation

  • Andrea Quintiliani, 2019. "Impact of Financial Transparency on SMEs’ Value," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-15.
    • Handle: RePEc:spt:apfiba:v:9:y:2019:i:6:f:9_6_15
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    More about this item

    Keywords

    financial transparency; sme value; agency theory; information asymmetries; tobin q; capital structure.;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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