Firm transparency and idiosyncratic risk

Hui-Cheng Yu, Mao-Feng Kao, Yi-Chang Chen, Bor-Yuan Tsai


This study focuses mainly on whether information transparency can reduce a firm’s management risk. The unique variable of information transparency is drawn from the ‘Annual Report on China’s Companies’ Public Transparency’, which is published by the China Social Science Academic Press. The empirical results indicate that the firm’s management risk reduces when a firm discloses more related financial and non-financial information. That is to say, the greater the firm’s information transparency, the lower the firm’s management risk. Therefore, it is critical to establish an effective system to evaluate information transparency, in particular for emerging economies.

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