2011
DOI: 10.1007/bf03342726
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Capital Market Implications of Corporate Disclosure: German Evidence

Abstract: This paper investigates the relationship between annual report disclosure, market liquidity, and capital cost for firms registered on the Deutsche Börse. Disclosure is comprehensively measured using the innovative Artificial Intelligence Measurement of Disclosure (AIMD). Results show that annual report disclosure enhances market liquidity by changing investors’ expectations and inducing portfolio adjustments. Trading frictions are negatively associated with disclosure. The study provides evidence for a capital… Show more

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Cited by 22 publications
(19 citation statements)
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“…Empirical support for this notion is provided by Glosten and Harris (1988), Welker (1995), Coller and Yohn (1997), Healy et al (1999) or Leuz and Verrecchia (2000). Second, it follows from the literature that less information asymmetry induced by increased disclosure is also associated with increased trading volumes (Frankel et al 1999;Healy et al 1999;Leuz and Verrecchia 2000;Grüning 2011).…”
Section: Hypothesis Developmentmentioning
confidence: 96%
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“…Empirical support for this notion is provided by Glosten and Harris (1988), Welker (1995), Coller and Yohn (1997), Healy et al (1999) or Leuz and Verrecchia (2000). Second, it follows from the literature that less information asymmetry induced by increased disclosure is also associated with increased trading volumes (Frankel et al 1999;Healy et al 1999;Leuz and Verrecchia 2000;Grüning 2011).…”
Section: Hypothesis Developmentmentioning
confidence: 96%
“…In a similar vein, Cuijpers and Buijink (2005) do not find any cost of equity capital effects for a sample of 133 firms voluntarily adopting non-local GAAP within the European Union in 1999. Finally, Grüning (2011) provides mixed evidence, finding higher disclosure levels to be associated with increased share turnover, smaller bidask spreads and increased market capitalization, but no direct association with cost of equity capital for 556 German Prime Standard firms in 2006.…”
Section: Literature Reviewmentioning
confidence: 99%
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“…According to Muinde (2013) financial statement is a standard practice of any organization to be prepared in a clear form for stakeholders in agreement with the board authority that regulates accounting information. In addition, Easley (2010) and Grüning (2011) state that the information included within the financial reports must be well-prepared and consist of high level of disclosure. This involves disclosure inside and outside the financial statements whether they were financial or non-financial information.…”
Section: Literature Reviewmentioning
confidence: 99%