The IUP Journal of Accounting Research and Audit Practices:
The Value Relevance of Corporate Voluntary Disclosure: Evidence from India

Article Details
Pub. Date : Jul, 2019
Product Name : The IUP Journal of Accounting Research and Audit Practices
Product Type : Article
Product Code : IJARAP11907
Author Name : Rupjyoti Saha and K C Kabra
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 21



The purpose of this study is to examine whether or not voluntary disclosure made by Indian listed companies are value-relevant in the capital market. The sample consists of top 100 non-financial, non-utility companies based on market capitalization listed on the Bombay Stock Exchange (BSE) over the period 2014-2017. Data regarding voluntary disclosure level has been collected by analyzing the contents of annual reports. In order to investigate the impact of voluntary disclosure on firm value, fixed-effect panel data regression model is employed. Furthermore, Two Stage Least Squares (2SLS) regression model with instrumental variables is used as a robustness test to alleviate the endogeneity issue. The findings of the study reveal that voluntary disclosure is value-relevant, i.e., impacts the firm value. The more the voluntary disclosure made by the companies, the higher the value they have in terms of market capitalization. Therefore, this finding provides impetus to managers to disclose more information voluntarily to meet the information needs of the stakeholders. By evaluating the value relevance of overall voluntary disclosure, the study contributes to the relevant literature, as there is paucity of studies regarding how the market participants perceive voluntary disclosure in an emerging market such as India, which is subjected to market imperfections.


In the wake of globalization of world’s financial markets, corporate disclosure has become a rapidly growing research area in the field of accounting literature in the recent years. Adequate disclosure of information is necessary in reducing information asymmetry between insiders and outsiders and to enable general investors to assess company performance, which in turn boosts their confidence. Disclosure can be categorized as mandatory and voluntary. While mandatory disclosure prescribes basic information that is applicable to the companies under different regulatory regime, voluntary disclosure is supplementary in nature which augments the mandatory disclosure (Ho and Wong, 2001).


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