The Relationship between Voluntary Disclosure and Financial Performance with Emphasis on Corporate Governance Mechanisms

Subject Areas : Journal of Investment Knowledge

fahime  safikhani ¹ (PhD of Accounting,Assistant professor of accounting department Qazvin Branch, Islamic Azad University, Qazvin, Iran)
Mohammadreza  safikhani ² (PhD student of Industrial Engineering, Noor Branch, Islamic Azad University, Noor, Iran)
fatemeh  besharatpour ³ (PhD student of Accounting, Sciences And Research Branch, Islamic Azad University, Tehran, Iran)

Received: 2021-05-16 Accepted : 2021-09-18 Published : 2024-12-21

Keywords: Financial Performance, Voluntary Disclosure, External Corporate Governance Mechanisms, Internal Corporate Governance Mechanisms,

Abstract :

The purpose of this study is to investigate the relationship between voluntary disclosure and financial performance of companies and the effect of corporate governance mechanisms on financial performance and also the effect of corporate governance mechanisms on the relationship between voluntary disclosure and financial performance of companies listed on the Tehran Stock Exchange. For this purpose, data related to 98 companies in the period from 2011 -2019 were collected. Multivariate regression was used to investigate the relationships between variables and the combined data method was used to test the hypotheses. Findings show that there is a positive and significant relationship between voluntary disclosure and financial performance of companies. In fact, increasing voluntary disclosure reduces agency problems by reducing information asymmetry between management and investors. As information asymmetry decreases, demand for transactions increases. As demand increases, stock prices rise and the company's financial performance improves. There is also a positive and significant relationship between corporate governance system (internal and external) and financial performance of companies. Companies with better governance mechanisms, narrower price gaps, higher stock quality, have the lowest price-volume impact. These factors lead to the optimal financial performance of the company. The corporate governance system also strengthens the link between voluntary disclosure and corporate financial performance. Good corporate governance promotes transparency and voluntary disclosure. Increasing disclosure reduces information asymmetry and thus improves the company's financial performance.

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