The Consequences of Voluntary Information Disclosure on Firm Value: Case of Tunisian listed firms

Abstract

The aim of this paper is to examine the impact of voluntary information disclosure on firm value for a sample of Tunisian firms listed on the Tunis Stock Exchange between 2005 and 2007. The results of the study have shown that, in the Tunisian context, (1) Voluntary corporate disclosure has an effect on income smoothing since an increased level of voluntary disclosure allows a detection of income smoothing. (2) Voluntary corporate disclosure has an effect on firm value via income smoothing. Actually, the more the Tunisian companies voluntarily disclose information, the less chance will be for managers to smooth earnings since the information needed to detect any income smoothing is held by investors, which entails an amplified firm value. This finding contributes to the relevant literature, particularly in an emerging market context characterized by a scarcity of studies regarding how the marketplace perceives voluntary disclosure. The paper evaluates comprehensively the value relevance of overall voluntary disclosure to the market participants. Finally, this finding might be accepted as a signal to corporations to disclose more information to the stakeholders. Since an increased level of voluntary disclosure will enhance the firm value. Keywords: voluntary disclosure, income smoothing, firm value, emerging market, income