TY - JOUR
T1 - Corporate disclosure, compliance and consequences
T2 - evidence from Russia
AU - Banerjee, Suman
AU - Estrin, Saul
AU - Pal, Sarmistha
N1 - Publisher Copyright:
© 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
PY - 2022
Y1 - 2022
N2 - Does the introduction of corporate transparency and disclosure rules in emerging economies affect compliance, and therefore earnings quality and firm performance? We explore these questions for an important emerging economy, Russia, using a natural experiment, the 2002 introduction of Russian corporate governance code. We exploit the exogenous variation in voluntary disclosure and find a significant increase in corporate disclosure among the domestic Russian firms over the period 2003–2007 when firms gradually adopted some but not all disclosure rules. The immediate effect of the introduction was a drop in reported earnings. Market valuation, however, only improved for domestic firms after 2007, when all domestic firms had complied. However, cross-listed firms, which were already satisfying international standards, remained largely unaffected. Though average compliance by domestic firms was only 53%, average firm value of treated domestic firms, relative to cross-listed ones, went up by about 10%. Results are robust, confirm external validity and offer important policy implications for other emerging/ transition economies.
AB - Does the introduction of corporate transparency and disclosure rules in emerging economies affect compliance, and therefore earnings quality and firm performance? We explore these questions for an important emerging economy, Russia, using a natural experiment, the 2002 introduction of Russian corporate governance code. We exploit the exogenous variation in voluntary disclosure and find a significant increase in corporate disclosure among the domestic Russian firms over the period 2003–2007 when firms gradually adopted some but not all disclosure rules. The immediate effect of the introduction was a drop in reported earnings. Market valuation, however, only improved for domestic firms after 2007, when all domestic firms had complied. However, cross-listed firms, which were already satisfying international standards, remained largely unaffected. Though average compliance by domestic firms was only 53%, average firm value of treated domestic firms, relative to cross-listed ones, went up by about 10%. Results are robust, confirm external validity and offer important policy implications for other emerging/ transition economies.
KW - 2002 Russian Corporate Governance Code
KW - Increased disclosure
KW - Russia
KW - difference-in-difference model
KW - domestic vs. cross-listed firms
KW - market valuation
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U2 - 10.1080/1351847X.2021.2007972
DO - 10.1080/1351847X.2021.2007972
M3 - Article
AN - SCOPUS:85121741752
SN - 1351-847X
VL - 28
SP - 1770
EP - 1802
JO - European Journal of Finance
JF - European Journal of Finance
IS - 17
ER -