Title: The relationship between information transparency and firm value: evidence from Taiwan

Authors: Chin-Fang Chao, Chung-Cheng Hsu, Ho-Sheng Yeh

Addresses: Department of Finance, Ling Tung University, No. 1, Lingtung Road, Nantun District, Taichung City, 408, Taiwan, ROC; Graduate Institute of Business, Feng Chia University, No. 100 Wenhwa Rd., Seatwen, Taichung City, 407, Taiwan, ROC. ' Department of Finance, Ling Tung University, No. 1, Lingtung Road, Nantun District, Taichung City, 408, Taiwan, ROC. ' Department of Management Information System, Yuh Chang Biotech Corporation, No. 126, Zili Rd., Wuqi Township, Taichung County, 435, Taiwan, ROC

Abstract: This study uses the indicators released by the Taiwan Securities & Futures Institute to re-score by hand the 262 listed companies in Taiwan|s electronics industry as measurements of those companies| information transparency. In addition, we adopt book value per share, modified Tobin|s Q, stock price and return on equity as measured variables of firm value to explore the influence of information transparency on firm value. Based on structural equation model (SEM) analysis and path analysis with observed variables (PA-OV), we find that information transparency is positively correlated with firm value, indicating that the more transparent a firm|s information, the higher the firm value. We also find that the timeliness of information disclosure is the most important factor in information transparency and that it has a positive relationship with both stock price and return on equity.

Keywords: information transparency; firm value; Taiwan; electronics industry; structural equation modelling; information disclosure; stock price; return on equity.

DOI: 10.1504/IJBEX.2010.030725

International Journal of Business Excellence, 2010 Vol.3 No.2, pp.125 - 141

Available online: 01 Jan 2010 *

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