This study uses panel data analysis, which is rarely used in the accounting literature; to investigate the benefits of increased disclosure, namely lower market beta and higher firm value, in the Egyptian emerging capital market. Little direct empirical evidence exists with regard to the implications of increased disclosure for market beta and firm value in general and in merging capital markets in particular. Moreover, most prior studies limit the investigation of benefits of increased disclosure to voluntary disclosure assuming that mandatory disclosure would not differ among companies. However, if the level of compliance with mandatory disclosure varied, prior studies would have ignored benefits of compliance with mandatory disclosure. This study extends the financial reporting literature and the capital market literature by investigating the relationships between the extent of different types of corporate disclosure and market beta for the Egyptian emerging capital market. Furthermore, it contributes to the literature by investigating the direct link between the extent of different types of corporate disclosure and firm value. The results generally show that individual measures of disclosure levels are negatively associated with estimated market beta. However, these results, consistent with the research hypotheses, depend on the proxy for the market used to estimate market beta, and the specification of the model. Furthermore, the results, consistent with prior studies, generally suggest that disclosure level is positively associated with firm value.
|Date of Award||Jun 2006|