Abstract
We examine whether the implementation of the information disclosure and transparency ranking system (IDTRS) affects firms’ value deviation in Taiwan using the annual reports of the listed companies for the period 2001–2004. Using firms’ value deviation as a proxy for information disclosure, we find that reducing information asymmetry can allay moral hazard. We also document a significant difference in the level of information disclosure in the years before and after the IDTRS implementation. Stronger information transparency can strengthen investment certainty and lead to less forecasting errors.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
In 2003–2004, the firm information disclosure score separates disclosure and nondisclosure.
We also separate these two types of firms and compare the results includes both the firms traded on Taiwan Stock Exchange and the firms traded on OTC. Both two type IDTRS of firms have similar result. Because of the limitation of length, we use the description instead of the form.
References
Agarwal V, Daniel N, Naik N (2009) Role of managerial incentives and discretion in hedge fund performance. J Financ 64:2221–2256. https://doi.org/10.1111/j.1540-6261.2009.01499.x
Armstrong CS, Core JE, Taylor DJ, Verrecchia RE (2011) When does information asymmetry affect the cost of capital? J Account Res 49:1–40. https://doi.org/10.1111/j.1475-679X.2010.00391.x
Atiase RK (1985) Pre-disclosure informational asymmetries, firm capitalization, and security price behavior around earnings announcements. J Account Res 23:21–36. https://doi.org/10.2307/2490905
Berger PG, Ofek E (1995) Diversification’s effect on firm value. J Financ Econ 37:39–65. https://doi.org/10.1016/j.respol.2008.05.004
Bergmann R, Friedl G (2008) Controlling innovative projects with moral hazard and asymmetric information. Res Policy 37:1504–1514. https://doi.org/10.2139/ssrn.771989
Bloomfield R, Fischer PE (2011) Disagreement and the cost of capital. J Account Res 49:41–68. https://doi.org/10.1016/j.jfineco.2015.05.008
Boone AL, White JT (2015) The effect of institutional ownership on firm transparency and information production. J Financ Econ 117:508–533. https://doi.org/10.1016/j.jfineco.2015.05.008
Botosan CA (1997) Disclosure level and the cost of equity capital. Account Rev 72: 323–349. http://www.jstor.org/stable/248475
Braga-Alves MV, Shastri K (2011) Corporate governance, valuation, and performance: evidence from a voluntary market reform in Brazil. Financ Manage 40:139–157. https://doi.org/10.1111/j.1755-053X.2010.01137.x
Bushee BJ, Leuz C (2005) Economic consequences of SEC disclosure regulation: evidence from the OTC bulletin board. J Account Econ 39:233–264. https://doi.org/10.1016/j.jacceco.2004.04.002
Bushman RM, Smith AJ (2001) Financial accounting information and corporate governance. J Account Econ 32:237–333. https://doi.org/10.1016/S0165-4101(01)00027-1
Cambell JL, Chen H, Dhaliwal SS, Lu H, Steele LB (2014) The information content of mandatory risk factor disclosure in corporate filings. Rev Account Stud 9(1):396–455. https://doi.org/10.1007/s11142-013-9258-3
Chan WHA, Cheung HY (2012) Cultural dimensions, ethical sensitivity, and corporate governance. J Bus Ethics 110:45–59. https://doi.org/10.1111/acfi.12046
Chang RD, Fang CJ (2006) Effects of the information disclosure and evaluation system on earnings management. Int J Account Stud 42:1–22. https://doi.org/10.6552/JOAR.2006.42.1
Chang M, Hooi L, Wee M (2014) How does investor relations disclosure affect analysts’ forecasts? Account Financ 54:365–391. https://doi.org/10.1111/acfi.12046
Chen CW, Liu VW (2013) Corporate governance under asymmetric information: theory and evidence. Econ Model 33:280–291. https://doi.org/10.1016/j.econmod.2013.04.010
Chen CW, Pantzalis C, Park JC (2009) Press coverage and stock prices’ deviation from fundamental value. J Financ Res. https://doi.org/10.2139/ssrn.1359261
Cheng CSA, Collins D, Huang HH (2006) Shareholder right, financial disclosure and the cost of equity capital. Rev Quant Financ Account 27(2):175–204. https://doi.org/10.1007/s11156-006-8795-2
Chhaochharia V, Grinstein Y (2007) Corporate governance and firm value: the impact of the 2002 governance rules. J Financ 62:1789–1825. https://doi.org/10.2139/ssrn.556990
Chung H, Judge WQ, Li YH (2015) Voluntary disclosure, excess executive compensation, and firm value. J Corp Financ 32:64–91. https://doi.org/10.1016/j.jcorpfin.2015.04.001
Collins DW, Kothari SP, Rayburn JD (1987) Firm size and the information content of prices with respect to earnings. J Account Econ 9:111–138. https://doi.org/10.1111/j.1540-6261.2012.01776.x
Core JE (2001) A review of the empirical disclosure literature: discussion. J Account Econ 31:441–456. https://doi.org/10.2139/ssrn.258513
Cunat V, Gine M, Guadalupe M (2012) The vote is cast: the effect of corporate governance on shareholder value. J Financ 67:1943–1977. https://doi.org/10.2139/ssrn.1555961
Dhaliwal DS, Li OZ, Tsang A, Yang YG (2011) Voluntary nonfinancial disclosure and the cost of equity capital: the initiation of corporate social responsibility reporting. Account Rev 86:59–100. https://doi.org/10.2308/accr.00000005
Diamond DW, Verrecchia RE (1991) Disclosure, liquidity, and the cost of capital. J Financ 46:1325–1359. https://doi.org/10.1111/j.1540-6261.2005.00767.x
Durnev A, Kim EH (2005) To steal or not to steal: firm attributes, legal environment, and valuation. J Financ 60:1461–1493. https://doi.org/10.2139/ssrn.318719
Eaton TV, Nofsinger JR, Weaver DG (2007) Disclosure and the cost of equity in international cross listing. Rev Quant Financ Account 29(1):1–24. https://doi.org/10.1007/s11156-007-0024-0
Fama EF (1980) Agency problems and the theory of the firm. J Polit Econ 88:288–307. https://doi.org/10.1086/260866
Fama EF, Jensen MC (1983) Separation of ownership and control. J Law Econ 26:301–325. https://doi.org/10.1016/0165-4101(87)90005-X
Francis J, Nanda D, Olsson P (2008) Voluntary disclosure, earnings quality, and cost of capital. J Account Res 46:53–99. https://doi.org/10.1111/j.1475-679X.2008.00267.x
Freeman RN (1987) The association between accounting earnings and security returns for large and small firms. J Account Econ 9:195–228. https://doi.org/10.1016/0165-4101(87)90005-X
Gao P (2010) Disclosure quality, cost of capital, and investor welfare. Account Rev 85:1–29. https://doi.org/10.2308/accr.2010.85.1.1
Gelb DS, Zarowin P (2002) Corporate disclosure policy and the in formativeness of stock prices. Rev Account Stud 7:33–51. https://doi.org/10.2139/ssrn.235009
Glosten LR, Milgrom PR (1985) Bid, ask, and transaction prices in A specialist market with heterogeneously informed traders. J Financ Econ 14:71–100. https://doi.org/10.1016/0304-405X(85)90044-3
Gompers P, Ishii J, Metrick A (2003) Corporate governance and equity prices. Q J Econ 118:107–155. https://doi.org/10.2139/ssrn.278920
Gong Y, Ho KC (2018) Does corporate social responsibility matter for corporate stability? Evidence from China. Qual Quant. 52:2291–2319. https://doi.org/10.1007/s11135-017-0665-6
Hail L (2002) The impact of voluntary corporate disclosure on the Ex-ante cost of capital for Swiss firms. Eurn Account Rev 11:741–773. https://doi.org/10.1080/0963818022000001109
Hartman-Glaser B, Piskorski T, Tchistyi A (2012) Optimal securitization with moral hazard. J Financ Econ 104:186–202. https://doi.org/10.2139/ssrn.1365000
Healy PM, Palepu KG (2001) Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature. J Account Econ 31:405–440. https://doi.org/10.1016/S0165-4101(01)00018-0
Healy PM, Hutton AP, Palepu KG (1999) Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemp Account Res 16:485–520. https://doi.org/10.1111/j.1911-3846.1999.tb00593.x
Heflin F, Subramanyam KR, Zhang Y (2003) Regulation FD and the financial information environment: early evidence. Account Rev 78:1–38. https://doi.org/10.2308/accr.2003.78.1.1
Hermalin B, Weisbach M (2012) Information disclosure and corporate governance. J Financ 67:195–233. https://doi.org/10.1111/j.1540-6261.2011.01710.x
Holland J (1998) Private voluntary disclosure, financial intermediation and market efficiency. J Bus Financ Account 25:29–68. https://doi.org/10.1111/1468-5957.00177
Holthausen RW, Verrecchia RE (1988) The effect of sequential information releases on the variance of price changes in an intertemporal multi-asset market. J Account Res 26:82–106. https://doi.org/10.2307/2491114
Hughes JS, Liu J, Liu J (2007) Information asymmetry, diversification, and cost of capital. Account Rev 82:705–729. https://doi.org/10.2308/accr.2007.82.3.705
Hung C, Chen C (2012) Press coverage, breadth of ownership and equity mispricing. Web J Chin Manage Rev 15:1–19. https://doi.org/10.2139/ssrn.2583611
Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and ownership structure. J Financ Econ 3:305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Jiao Y (2011) Corporate disclosure, market valuation, and firm performance. Financ Manage 40:647–676. https://doi.org/10.1111/j.1755-053X.2011.01156.x
Kim O, Verrecchia RE (1991) Trading volume and price reactions to public announcements. J Account Res 29:302–320. https://doi.org/10.2307/2491051
Klapper LF, Love I (2004) Corporate governance, investor protection, and performance in emerging markets. J Corp Financ 10:703–728. https://doi.org/10.1016/S0929-1199(03)00046-4
Lambert R, Leuz C, Verrecchia RE (2007) Accounting information, disclosure, and the cost of capital. J Account Res 45:385–420. https://doi.org/10.1111/j.1475-679X.2007.00239.x
Lee HL, Lee H (2015) Effect of information disclosure and transparency ranking system on mispricing of accruals of Taiwanese firms. Rev Quant Financ Account 44:445–471. https://doi.org/10.1007/s11156-013-0413-5
Lee SC, Lin CT (2010) An accounting-based valuation approach to valuing corporate governance in Taiwan. J Contemp Account Econ 6:47–60. https://doi.org/10.1016/j.jcae.2010.09.002
Leftwich R (1980) Market failure fallacies and accounting information. J Account Econ 2:193–211. https://doi.org/10.2307/2672911
Leuz C, Verrecchia RE (2000) The economic consequences of increased disclosure. J Accountg Res 38:91–124. https://doi.org/10.2139/ssrn.171975
Liao HH, Chen TK, Lu CW (2009) Bank credit risk and structral credit models: agency and information asymmetry perspective. J Bank Financ 33:1520–1530. https://doi.org/10.1007/s11156-011-0234-3
Lin CF (2006) Transparency—an empirical study using Taiwan stock exchange data. Rev Pac Basin Financ Mark Pol 9(1):129–147. https://doi.org/10.1142/S0219091506000690
Lin B, Yang R (2012) Does Regulation Fair Disclosure affect analysts’ forecast performance? The case of restructuring firms. Rev Quant Financ Account 38:495–517. https://doi.org/10.1007/s11156-011-0234-3
Lundholm R, Myers LA (2002) Bringing the future forward: the effect of disclosure on the returns–earnings relation. J Account Res 40:809–839. https://doi.org/10.1111/1475-679X.00072
Maletta MJ, Zhang YM (2012) Investor reactions to contrasts between the earnings preannouncements of peer firms. Contemp Account Res 29:361–381. https://doi.org/10.1111/j.1911-3846.2010.01063.x
Merton RC (1987) A simple model of capital market equilibrium with incomplete information. J Financ 42:483–510. https://doi.org/10.2307/2328367
Pan LH, Lin CT, Lee SC, Ho KC (2015) Information ratings and capital structure. J Corp Financ 31:17–32. https://doi.org/10.1016/j.jcorpfin.2015.01.011
Perotti EC, Thadden ELV (2003) Strategic transparency and informed trading: will capital market integration force convergence of corporate governance? J Financ Quant Anal 38:61–86. https://doi.org/10.2307/4126764
Rhodes-Kropf M, Robinson DT, Viswanathan S (2005) Valuation waves and merger activity: the empirical evidence. J Financ Econ 77:561–603. https://doi.org/10.2139/ssrn.412680
Sengupta P (1998) Corporate disclosure quality and the cost of debt. Account Rev 73:459–474. https://doi.org/10.1016/j.jcorpfin.2014.09.006
Sheng X, Thevenot M (2015) Quantifying differential interpretation of public information using financial analysts’ earnings forecasts. Int J For 31:515–530. https://doi.org/10.1016/j.ijforecast.2014.08.012
Shive S, Yun H (2013) Are mutual funds sitting ducks? J Financ Econ 107:220–237. https://doi.org/10.1016/j.jfineco.2012.08.012
Singhvi S, Desai H (1971) An empirical analysis of the quality of corporate financial disclosure. Account Rev 46(1):129–138. https://doi.org/10.1108/14720700110389548
Spicer BH (1978) Investors, corporate social performance and information disclosure: an empirical study. Account Rev 52(1):94–111. https://doi.org/10.1057/9781137414694.0007
Tuttle B, Harrell A, Harrison P (1997) Moral hazard, ethical considerations, and the decision to implement an information system. J Manage Inform Syst 13:7–27. https://doi.org/10.1080/07421222.1997.11518140
Verrecchia R (1990) Information quality and discretionary disclosure. J Account Econ 12:365–380. https://doi.org/10.1016/0165-4101(90)90021-U
Wang SN, Liang H, Gao WT (2015) Mandatory and voluntary information disclosure and the effects on financial analysts. Chin Manage Stud 9:425–440. https://doi.org/10.1108/CMS-01-2015-0012
Welker M (1995) Disclosure policy, information asymmetry, and liquidity in equity markets. Contemp Account Res 11:801–827. https://doi.org/10.1111/j.1911-3846.1995.tb00467.x
Yu HY, Chen LW (2017) Ambiguous customer identity disclosure and the cost of equity capital. Rev Pac Basin Financ Mark Pol 20(3):1750021. https://doi.org/10.1142/S0219091517500217
Acknowledgements
We thank Cheng-Few Lee (the Editor) and two anonymous reviewers for helpful comments. Professor Jiang thanks the Ministry of Science and Technology of Taiwan for partial financial support (MOST 105-2410-H-155-030). This work was also supported by Shantou University under Grant “Shantou University Research Fund” (2015WQNCX031), the Humanistic and Social Science Research Base—Shantou University Research Institute for Cooperation of Guangdong and Taiwan Enterprises under Grant “Major Research Project Fund”, and the fundamental research for the central universities (2017QN034).
Author information
Authors and Affiliations
Corresponding author
Appendices
Appendix 1
Distribution of firms by industry
Industry | Obs. of firm | Obs. of disclosure firm | Mean Age | Mean ROA | ||
|---|---|---|---|---|---|---|
1 | Cement | 28 | 12 | 45.71 | 0.02 | |
2 | Food | 92 | 40 | 35.65 | 0.02 | |
3 | Plastics | 92 | 60 | 35.91 | 0.03 | |
4 | Textile | 200 | 60 | 32.00 | − 0.01 | |
5 | Electric machinery | 152 | 32 | 30.21 | 0.03 | |
6 | Electric cables | 56 | 4 | 36.29 | 0.01 | |
7 | Chemical and biological technology | 164 | 44 | 33.22 | 0.06 | |
8 | Glass ceramic | 16 | 4 | 37.25 | 0.01 | |
9 | Paper | 28 | 8 | 44.29 | 0.00 | |
10 | Steel | 132 | 24 | 29.88 | 0.03 | |
11 | Rubber | 40 | 20 | 39.50 | 0.04 | |
12 | Auto | 16 | 8 | 47.50 | 0.05 | |
13 | Electronics | 1044 | 432 | 20.31 | 0.03 | |
14 | Building material and construction | 220 | 24 | 27.62 | − 0.02 | |
15 | Shipping | 76 | 12 | 33.79 | 0.04 | |
16 | Sightseeing | 52 | 4 | 31.23 | 0.00 | |
17 | Finance and insurance | 84 | 24 | 31.33 | 0.01 | |
18 | Trade department | 52 | 12 | 32.62 | 0.01 | |
19 | Securities | 20 | 12 | 21.80 | 0.00 | |
20 | Investment and credit | 12 | 4 | 16.33 | 0.08 | |
21 | Oil, gas and electricity | 44 | 4 | 23.82 | 0.04 | |
22 | Other | 188 | 44 | 26.81 | 0.02 | |
Total | 2808 | 888 | Average | 32.41 | 0.02 |
Appendix 2
Variable definitions
Variable | Explanation |
|---|---|
Deviation1 | Market value of equity plus book value of debt to total assets (Rhodes-Kropf et al. 2005) |
Deviation2 | Market value of equity plus book value of debt to imputed value of total capital to sales for the median single-segment firm in industry and year (Berger and Ofek 1995) |
Deviation3 | Market value of equity plus book value of debt to imputed value of total capital to assets for the median single-segment firm in industry and year (Berger and Ofek 1995) |
Deviation4 | Market value of equity plus book value of debt to imputed value of total capital to EBITDA for the median single-segment firm in industry and year (Berger and Ofek 1995) |
Firm characteristics | |
IDTRS (0,1) | Information Disclosure and Transparency Ranking System (IDTRS) is a dummy indicator. It is 1 if the sample year is after and including 2003 and is 0 if before and including 2002 |
Ln (BE) | Natural log of book value of equity |
Ln (NI)+ | Natural log of absolute value of net income |
Dummy (NI)- | It is 1 if the net income is negative and else is 0 |
LEV | The ratio of debt to book value of assets |
ROA | Earning to book value of asset. |
AGE | Firm AGE |
Agency-based measurements | |
SDS | Percentage of total outstanding shares owned by directors and supervisors |
SLS | Percentage of total outstanding shares owned by largest shareholder |
TSC | Times of seating to cash flow rights = seating rights %/cash flow rights % |
TSV | Times of seating to voting rights = seating rights %/voting rights % |
Dummy (DIV) | It is 1 if the cash dividend bigger than 0 and else is 0 |
Dummy (TSE) | It is 1 if the listed company and 0 is OTC firm |
Appendix 3
Information disclosure and transparency measures
I. Compliance with the mandatory information disclosures (Questions 1–12) | |
1 | Whether companies comply with Procedures for Verification and Disclosure of Material Information of Listed Companies, and whether companies have no records of breach penalty or other more serious punishment due to violation of the above regulations? |
2 | Whether companies comply with Procedures for Holding Material Information Press Conference of Listed Companies, and whether companies have no records of breach penalty or other more serious punishment due to violation of the above regulations? |
3 | Whether companies comply with Procedures for Information Reporting of Listed Companies, and whether companies have no records of breach penalty or other more serious punishment due to violation of the above regulations? |
4 | Whether the announcement of ownership change of directors, supervisors, managers, and shareholders with more than 10% ownership complies with TWSE/GTSM’s regulations and whether companies have no records of punishment due to violation of the above regulations? |
5 | Whether company’s announcements of lending and guarantee from the company itself and its subsidiaries have no records of punishment due to violation of regulators’ rules? |
6 | Whether company’s announcements of asset disposal or acquisition have no records of punishment due to violation of regulators’ rules? |
7 | Whether company announces major events that have significant impact on shareholders’ rights or stock price on a timely basis, and whether company has no records of punishment due to violation of the above regulations? |
8 | Whether company has reported, on a timely basis, the internal control statement (four months within the completion of accounting year) and internal audit related operations, and whether company has no records of punishment due to violation of the above regulations? |
9 | Whether company discloses auditor’s fee based on regulation and whether company has no records of punishment due to violation of the above regulations? |
10 | Whether company’s financial report needs adjustment or re-statement as required by regulator, TWSE, or GTSM? |
11 | Whether company discloses clarification based on regulators’ rules when the material information that has some impact on stock price is reported by the press media or investors, and whether company receives no notification of improvement in this matter? |
12 | Whether company reports and announces shareholder handbook and meeting supplement in time, and whether company receives no penalty associated with the violation of the above regulations? |
II. Timeliness of information reporting (Questions 13–39) | |
13 | Whether company announces monthly financial report in time? |
14 | Whether company announces consolidated monthly financial report in time? (This item receives extra bonus point) |
15 | Whether company announces monthly operating income and before tax income statement in time? (This item receives extra bonus point) |
16 | Whether the company announces monthly guarantees and lending information backed up by the company itself and its subsidiaries in time? |
17 | Whether company announces operating income, operating income by products for major subsidiaries, and intra-company sales and its sales percentage between the company itself and its major subsidiaries on a timely basis? |
18 | Whether company announces monthly amount of derivative product trading for the company itself and its subsidiaries in time? |
19 | Whether company reports the investment information in Mainland from the company and its overseas subsidiaries based on the Operating Rules for Information Report of Listed Companies? |
20 | Whether company reports independent directors’ and supervisors’ position, experience, and education background and their part-time jobs as directors and supervisors for other companies in time? |
21 | Whether company reports treasury stock related operations to regulators, TWSE, or GTSM in time? |
22 | Whether company reports annual exercised and unexercised employee stock warrant information in time based on the Rules for Information Reporting of Listed Companies? |
23 | Whether company reports annual report in time? |
24 | Whether company finishes annual report within 2 months of accounting year-end? (This item receives extra bonus point) |
25 | Whether company reports annual report within 3 months of accounting year-end? (This item receives extra bonus point) |
26 | Whether company reports semi-annual report in time? |
27 | Whether company reports semi-annual report within 1 month of accounting half year-end? (This item receives extra bonus point) |
28 | Whether company reports first quarter and third quarter financial reports in time? |
29 | Whether company reports consolidated financial statements in time? |
30 | Whether company reports annual report in time? |
31 | Whether company reports first quarter and third quarter consolidated financial statements in time? |
32 | Whether company reports first quarter and third quarter consolidated financial statements within 1 month of first quarter-end and third quarter-end respectively in time? (This item receives extra bonus point) |
33 | Whether company reports accounting manager’s qualifications and on-the-job professional training situation in time? |
34 | Whether company reports shareholder handbook and meeting supplement 30 days before the start of shareholder meeting? (This item receives extra bonus point) |
35 | Whether company reports English version shareholder handbook and meeting supplement 30 days before the start of shareholder meeting? (This item receives extra bonus point) |
36 | Whether company reports English version shareholder annual report and uploads it to market observation post system (MOPS)? (This item receives extra bonus point) |
37 | Whether company discloses English version material information concurrently when Chinese version material information is announced? (This item receives extra bonus point) |
38 | Whether company reports the date of shareholders’ meeting in time based on pre-announcement reporting mechanism of publicly listed firms? |
39 | Whether company reports financial statements in XBRL format in time? (This item receives extra bonus point) |
III. Disclosure of financial forecast (Questions 40–44) | |
40 | Whether company discloses financial forecast information of the current year voluntarily? (This item receives extra bonus point) |
41 | Whether company discloses consolidated financial forecast information of the current year voluntarily? (This item receives extra bonus point) |
42 | Whether company explains the possible factors that may lead to a discrepancy between financial forecast and actual financial results in advance (warning of forward looking information)? |
43 | Whether company has received rectification from regulator, and records of flaw from TWSE/GTSM due to the delayed update (correction) of financial forecast information? |
44 | Whether company has received rectification from regulator, and records of flaw from TWSE/GTSM due to unreasonable basic assumptions on the delayed update (correction) of financial forecast information? |
IV. Disclosure of annual report (Questions 45–94) | |
(1) Transparency in financial and operating information | |
45 | Whether company discloses important accounting policy in annual report? |
46 | Whether the accounting standards that the company adopts are the same as the generally accepted accounting principles in Taiwan? |
47 | Whether the annual report discloses accounting adjustments due to the adoption of different accounting principles (Taiwan Vs. IFRS/U.S. GAAP)? (This item receives extra bonus point) |
48 | Whether company discloses the methods of fixed asset depreciation and depreciation age limit? |
49 | Whether company discloses the rules and methods of asset and liability valuation? (This item receives extra bonus point) |
50 | Whether company uses buying price or selling price to decide the fair value of non-stock and non-warrants derivative products? (This item receives extra bonus point) |
51 | Whether company discloses analytical information that is conducted by different departments in annual report? |
52 | Whether company discloses the name of certified audit firm and the unqualified (modified unqualified) audit report in annual report? |
53 | Whether company discloses the amount and types of other non-audit fees that are paid to the same certified audit firm or its affiliated enterprises in annual report? (This item receives extra bonus point) |
54 | Whether company discloses organizational and ownership structures in annual report? |
55 | Whether company discloses the guarantee, lending, and other derivative trading information of itself or its affiliated enterprises in annual report? |
56 | Whether company discloses trading information for related persons (including its affiliation) in annual report? |
57 | Whether company discloses the review of company’s operation from the management team in annual report? |
58 | Whether company discloses information about industry trend and macroeconomics environment in annual report? |
59 | Whether company discloses long-term and short-term sales expansion project in annual report? |
60 | Whether company discloses future R&D plan and its estimated expenses in annual report? |
61 | Whether company discloses R&D investment plan and progress in annual report? (This item receives extra bonus point) |
62 | Whether company discloses detailed information about the products and services manufactured and provided by the company in annual report? |
63 | Whether company discloses the amount produced and sold and product mix in annual report? |
64 | Whether company discloses industry-specific Key Performance Indicators (KPI) in annual report? (This item receives extra bonus point) |
65 | Whether company discloses historical performance indicator (such as ROE, ROA, etc.) in annual report? |
66 | Whether company discloses risk management policy in annual report? |
67 | Whether company discloses the organizational structure of risk management in annual report? (This item receives extra bonus point) |
68 | Whether company discloses the adoption of hedge accounting and its associated objective and methods in annual report? |
69 | Whether company discloses managers’ participation in corporate governance related on-the-job training in annual report? (This item receives extra bonus point) |
70 | Whether company discloses the information of employees’ on-the-job training in annual report? |
71 | Whether company discloses all kinds of employees’ welfare, retirement plan, and their current practice in annual report? |
72 | Whether company discloses certificates (regulator certified) holding situation for the personnel responsible for the transparency of finance information in annual report? (This item receives extra bonus point) |
73 | Whether company discloses the ethic or moral rules for employees in annual report? (This item receives extra bonus point) |
74 | Whether company discloses the Procedures for Internal Material Information Processing in annual report? (This item receives extra bonus point) |
75 | Whether company discloses work environment and safety related protective measures in annual report? (This item receives extra bonus point) |
76 | Whether company discloses corporate social responsibility in annual report? |
(2) Board meeting and ownership structure | |
77 | Whether company discloses directors’ or supervisors’ names, education, experience, ownership, and the date of becoming board members in annual report? |
78 | Whether company discloses the classification of titles of directors and supervisors based on “independence” in annual report? |
79 | Whether company discloses the part-time positions that are held by directors and supervisors in annual report? |
80 | Whether company discloses directors’ and supervisors’ remuneration in annual report? |
81 | Whether company discloses the detailed breakdown of directors’ and supervisors’ remuneration except those items required for disclosure by regulators in annual report? (This item receives extra bonus point) |
82 | Whether company discloses the compensation of CEO, and vice presidents, and top management in annual report? |
83 | Whether company discloses the current situation (increase or decrease) of the stocks being used as collaterals by directors, supervisors, managers, and large shareholders in annual report? |
84 | Whether company discloses the board meeting attendance situation for directors and supervisors, and the attendance situation of audit committee meeting for independent directors in annual report? |
85 | Whether company discloses governing information regarding the operation of board meeting and audit committee meeting separately in annual report? |
86 | Whether company discloses training for directors and supervisors in annual report? |
87 | Whether company discloses the discussion of corporate governance in annual report? |
88 | Whether company discloses the resignation and dismissal situation for personnel related to corporate disclosure and financial report in annual report? |
89 | Whether company discloses the names and positions of top 10 employee stock warrants recipients in annual report? |
90 | Whether company discloses the bonus amount, names and positions of top 10 employees who receive stock bonus in annual report? (This item receives extra bonus point) |
91 | Whether company discloses managers’ names, stock ownership, education, experience, current part-time positions in other companies, and the number of employee stock warrants in annual report? |
92 | Whether company discloses the amount and percentage of stock ownership for top 10 shareholders in annual report? |
93 | Whether company discloses the information of related persons between top 10 shareholders in annual report? |
94 | Whether company discloses the review of execution situation (for the items decided for execution in shareholder meeting) in annual report? (This item receives extra bonus point) |
V. Company website disclosure (Questions 95–114) | |
95 | Whether company has corporate website that discloses public information (including detailed financial data) on website? |
96 | Whether company discloses shareholders annual report on corporate website? |
97 | Whether company discloses public information (including detailed financial data) in English on website? |
98 | Whether company discloses shareholder meeting information in English on corporate website? |
99 | Whether company discloses monthly operating profit/loss (financial holding companies, banks, and bills finance companies disclose profit and loss for the departments with continued operation) and accumulated operating profit/loss for the current year on corporate website? |
100 | Whether company discloses the reports of monthly revenue and the monthly revenue for the previous 24 months on corporate website? |
101 | Whether company discloses the compliance of TWSE’s rule regarding the qualifications of appointing independent directors on corporate website? |
102 | Whether company discloses execution items of board meeting on corporate website? |
103 | Whether company discloses complete meeting minutes of board meeting on corporate website? |
104 | Whether company discloses dividends and stock price information on corporate website? |
105 | Whether company discloses material information on corporate website? |
106 | Whether company discloses articles of incorporation, and the operating procedures for acquisition and disposal of assets, lending, guarantee, and derivative trading on corporate website? |
107 | Whether company provides shareholders Q&A function on corporate website? |
108 | Whether company discloses information on whether the company holds a conference for institutional investor and posts meeting related information on corporate website? |
109 | Whether company discloses the audio or video recording throughout the conference of institutional investors on corporate website? |
110 | Whether shareholders are allowed to exert their voting rights in writing or via electronic media and whether such voting methods and their execution situation are posted on corporate website? |
111 | Whether company discloses the election regulation regarding the directors and supervisors to be elected are nominated by a nominating committee? |
112 | Whether company discloses corporate organizational structure, managers’ positions, power, and their responsibility on corporate website? |
113 | Whether company discloses the organization and operation of internal audit on corporate website? |
114 | Whether company discloses corporate social responsibility on corporate website? |
Rights and permissions
About this article
Cite this article
Chu, CC., Ho, KC., Lo, CC. et al. Information disclosure, transparency ranking system and firms’ value deviation: evidence from Taiwan. Rev Quant Finan Acc 53, 721–747 (2019). https://doi.org/10.1007/s11156-018-0764-z
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11156-018-0764-z