CORPORATE VALUATION SPURRED BY INFORMATION TRANSPARENCY IN AN EMERGING ECONOMY

The stock price crash can result from lacking information transparency, especially in emerging economies characterized by weak corporate governance and high volatility. This study approaches corporate information transparency through the crash risk of stock prices on the Vietnamese market, develops...

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Bibliographic Details
Published in:Annals of financial economics 2021-09, Vol.16 (3)
Main Authors: NGUYEN, TRAN THAI HA, WONG, WING-KEUNG, PHAN, GIA QUYEN, TRAN, DANG THANH MINH, MOSLEHPOUR, MASSOUD
Format: Article
Language:English
Subjects:
Asymmetric information
Corporate governance
Emerging markets
Endogenous
Finance
Generalized method of moments
Panel data
Prices
Prospects
Risk reduction
Stock prices
Transparency
Valuation
Volatility
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Summary:The stock price crash can result from lacking information transparency, especially in emerging economies characterized by weak corporate governance and high volatility. This study approaches corporate information transparency through the crash risk of stock prices on the Vietnamese market, develops a model that reflects the effect of information disclosure on corporate valuation, and employs two-step system generalized method of moments (S-GMM) estimation for panel data to deal with endogenous problems. This paper finds that the crash risk of stock price, referred to as the low level of information disclosure, creates a significantly negative effect on corporate valuation, expressing that information asymmetry causes serious issues for corporate prospects in the context of an emerging economy. Thus, corporates are suggested to enrich their information disclosure through periodic reports as a crucial mechanism to improve their transparency, reduce stock price crash risk, and enhance their valuation. This study also proposes related recommendations to enhance corporate governance and finance supervisory to maintain sustainability in the future.
ISSN:2010-4952
2010-4960
DOI:10.1142/S2010495221500111