The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms
This paper studies the effects of voluntary accounting information disclosure through auditing on firm access to finance, exposure to corruption, and sales growth. Relying on a data set of more than 70,000 firms in 121 countries, the analysis finds...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/05/24440274/dark-side-disclosure-evidence-government-expropriation-worldwide-firms http://hdl.handle.net/10986/21989 |
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okr-10986-219892021-04-23T14:04:06Z The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms Liu, Tingting Ullah, Barkat Wei, Zuobao Xu, Lixin Colin GROWTH RATES LINE OF CREDIT DEPOSIT LINES OF CREDIT COMPETITORS RED TAPE INSTITUTIONAL ENVIRONMENT FINANCIAL MARKET DEVELOPMENT FINANCING INFORMAL SECTOR COUNTRY FIXED EFFECTS INCOME FOREIGN OWNERSHIP CONSUMER PRICE INDICES PRIVATIZATION GOVERNMENT PROPERTY RIGHTS EXCHANGE LIQUIDITY DEVELOPING COUNTRIES TAX COLLECTION POLITICAL ECONOMY CAPITAL STRUCTURE WORLD DEVELOPMENT INDICATORS COMPANIES FINANCIAL STATEMENTS INFORMATION SHARING LOAN FINANCIAL STATEMENT FIRM SIZE PRICE TAX CORRUPTION INVESTMENT OPPORTUNITY DISCLOSURE INDEPENDENCE BANK LENDING EXTERNAL FINANCE SMALL BUSINESS STATES FUTURE PROSPECTS STATE OWNERSHIP CREDIT RATINGS LEGAL CONSTRAINTS CURRENCY INITIAL PUBLIC OFFERINGS MARKET DEVELOPMENT FINANCIAL INSTITUTION REAL GROWTH RATE FOREIGN COMPANY FINANCIAL OBSTACLES CORPORATE FINANCE MARKETS FIRM GOVERNANCE INDICATORS LENDERS PRIVATE SECTOR DEVELOPMENT ECONOMIC REFORMS LICENSING ENTERPRISES TAX COLLECTIONS AGENCY COSTS CAPITAL INVESTMENTS FINANCIAL HEALTH TAXES INFORMATION ASYMMETRY INVESTMENT DECISIONS EXPENDITURE CLIENT FISCAL INVESTORS FIRMS INDIVIDUAL FIRM ECONOMIC PERFORMANCE BUSINESS ENVIRONMENTS OWNERSHIP STRUCTURE TRANSPARENCY STATE GOVERNMENT FINANCIAL CRISIS STARTUPS PARTIES FUTURE REPUTATION COUNTRY DUMMY STATE-OWNED ENTERPRISES UNDERDEVELOPED MARKETS ENTERPRISE FIRM PERFORMANCE TAX RATES MARKET LOCAL CURRENCY GOVERNMENT EXPROPRIATION COMPANY REGULATION FINANCIAL OBSTACLE DIVERSIFICATION CITIZENS GOVERNANCE EXPOSURE INSURANCE SOCIAL CAPITAL TAXATION MANUFACTURING INDUSTRIES ECONOMIC DEVELOPMENT STATE INVESTOR GOVERNMENT OWNERSHIP FIXED ASSETS SECURITY FINANCIAL DEVELOPMENT LEGAL SYSTEM FINANCIAL MARKET GROWTH RATE INVESTMENT FINANCIAL INTERMEDIATION SHARE INVESTOR PROTECTION GOVERNANCE INDICES FINANCIAL INFORMATION SALES GROWTH BUSINESS ENVIRONMENT BANKING BUSINESS LICENSING INSTITUTIONAL DEVELOPMENT FOREIGN COMPANIES LAW INVESTMENTS EXTERNAL FINANCING CORPORATE DISCLOSURES SMALL FIRMS POOR GOVERNANCE AUDIT CUSTOMERS SUPPLIERS FIRM GROWTH STRONG GOVERNANCE CAPITAL INVESTMENT GOVERNMENTS BUSINESS PERFORMANCE SEE FINANCIAL CONSTRAINTS POLITICAL INSTABILITY PRICES COST OF CAPITAL COMPETITION CORPORATE GOVERNANCE This paper studies the effects of voluntary accounting information disclosure through auditing on firm access to finance, exposure to corruption, and sales growth. Relying on a data set of more than 70,000 firms in 121 countries, the analysis finds that disclosure can be a double-edged sword. On the one hand, audited firms exhibit a slightly lower level of financial constraints than unaudited firms. On the other hand, audited firms face a significantly higher level of corruption obstacles. The net effects of voluntary information disclosure on firm growth are negative, which can largely be explained by the fact that most of the countries in the sample are developing countries where institutions are weak. The beneficial effect of disclosure increases as a country’s property rights protection improves. The qualitative results are robust to considerations of the endogeneity of auditing and to alternative measures of corruption and financial constraints. The findings reveal the dark side of voluntary information disclosure: exposing firms to government expropriation where institutions are weak. 2015-06-02T14:50:22Z 2015-06-02T14:50:22Z 2015-05 Working Paper http://documents.worldbank.org/curated/en/2015/05/24440274/dark-side-disclosure-evidence-government-expropriation-worldwide-firms http://hdl.handle.net/10986/21989 English en_US Policy Research Working Paper;No. 7254 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
GROWTH RATES LINE OF CREDIT DEPOSIT LINES OF CREDIT COMPETITORS RED TAPE INSTITUTIONAL ENVIRONMENT FINANCIAL MARKET DEVELOPMENT FINANCING INFORMAL SECTOR COUNTRY FIXED EFFECTS INCOME FOREIGN OWNERSHIP CONSUMER PRICE INDICES PRIVATIZATION GOVERNMENT PROPERTY RIGHTS EXCHANGE LIQUIDITY DEVELOPING COUNTRIES TAX COLLECTION POLITICAL ECONOMY CAPITAL STRUCTURE WORLD DEVELOPMENT INDICATORS COMPANIES FINANCIAL STATEMENTS INFORMATION SHARING LOAN FINANCIAL STATEMENT FIRM SIZE PRICE TAX CORRUPTION INVESTMENT OPPORTUNITY DISCLOSURE INDEPENDENCE BANK LENDING EXTERNAL FINANCE SMALL BUSINESS STATES FUTURE PROSPECTS STATE OWNERSHIP CREDIT RATINGS LEGAL CONSTRAINTS CURRENCY INITIAL PUBLIC OFFERINGS MARKET DEVELOPMENT FINANCIAL INSTITUTION REAL GROWTH RATE FOREIGN COMPANY FINANCIAL OBSTACLES CORPORATE FINANCE MARKETS FIRM GOVERNANCE INDICATORS LENDERS PRIVATE SECTOR DEVELOPMENT ECONOMIC REFORMS LICENSING ENTERPRISES TAX COLLECTIONS AGENCY COSTS CAPITAL INVESTMENTS FINANCIAL HEALTH TAXES INFORMATION ASYMMETRY INVESTMENT DECISIONS EXPENDITURE CLIENT FISCAL INVESTORS FIRMS INDIVIDUAL FIRM ECONOMIC PERFORMANCE BUSINESS ENVIRONMENTS OWNERSHIP STRUCTURE TRANSPARENCY STATE GOVERNMENT FINANCIAL CRISIS STARTUPS PARTIES FUTURE REPUTATION COUNTRY DUMMY STATE-OWNED ENTERPRISES UNDERDEVELOPED MARKETS ENTERPRISE FIRM PERFORMANCE TAX RATES MARKET LOCAL CURRENCY GOVERNMENT EXPROPRIATION COMPANY REGULATION FINANCIAL OBSTACLE DIVERSIFICATION CITIZENS GOVERNANCE EXPOSURE INSURANCE SOCIAL CAPITAL TAXATION MANUFACTURING INDUSTRIES ECONOMIC DEVELOPMENT STATE INVESTOR GOVERNMENT OWNERSHIP FIXED ASSETS SECURITY FINANCIAL DEVELOPMENT LEGAL SYSTEM FINANCIAL MARKET GROWTH RATE INVESTMENT FINANCIAL INTERMEDIATION SHARE INVESTOR PROTECTION GOVERNANCE INDICES FINANCIAL INFORMATION SALES GROWTH BUSINESS ENVIRONMENT BANKING BUSINESS LICENSING INSTITUTIONAL DEVELOPMENT FOREIGN COMPANIES LAW INVESTMENTS EXTERNAL FINANCING CORPORATE DISCLOSURES SMALL FIRMS POOR GOVERNANCE AUDIT CUSTOMERS SUPPLIERS FIRM GROWTH STRONG GOVERNANCE CAPITAL INVESTMENT GOVERNMENTS BUSINESS PERFORMANCE SEE FINANCIAL CONSTRAINTS POLITICAL INSTABILITY PRICES COST OF CAPITAL COMPETITION CORPORATE GOVERNANCE |
| spellingShingle |
GROWTH RATES LINE OF CREDIT DEPOSIT LINES OF CREDIT COMPETITORS RED TAPE INSTITUTIONAL ENVIRONMENT FINANCIAL MARKET DEVELOPMENT FINANCING INFORMAL SECTOR COUNTRY FIXED EFFECTS INCOME FOREIGN OWNERSHIP CONSUMER PRICE INDICES PRIVATIZATION GOVERNMENT PROPERTY RIGHTS EXCHANGE LIQUIDITY DEVELOPING COUNTRIES TAX COLLECTION POLITICAL ECONOMY CAPITAL STRUCTURE WORLD DEVELOPMENT INDICATORS COMPANIES FINANCIAL STATEMENTS INFORMATION SHARING LOAN FINANCIAL STATEMENT FIRM SIZE PRICE TAX CORRUPTION INVESTMENT OPPORTUNITY DISCLOSURE INDEPENDENCE BANK LENDING EXTERNAL FINANCE SMALL BUSINESS STATES FUTURE PROSPECTS STATE OWNERSHIP CREDIT RATINGS LEGAL CONSTRAINTS CURRENCY INITIAL PUBLIC OFFERINGS MARKET DEVELOPMENT FINANCIAL INSTITUTION REAL GROWTH RATE FOREIGN COMPANY FINANCIAL OBSTACLES CORPORATE FINANCE MARKETS FIRM GOVERNANCE INDICATORS LENDERS PRIVATE SECTOR DEVELOPMENT ECONOMIC REFORMS LICENSING ENTERPRISES TAX COLLECTIONS AGENCY COSTS CAPITAL INVESTMENTS FINANCIAL HEALTH TAXES INFORMATION ASYMMETRY INVESTMENT DECISIONS EXPENDITURE CLIENT FISCAL INVESTORS FIRMS INDIVIDUAL FIRM ECONOMIC PERFORMANCE BUSINESS ENVIRONMENTS OWNERSHIP STRUCTURE TRANSPARENCY STATE GOVERNMENT FINANCIAL CRISIS STARTUPS PARTIES FUTURE REPUTATION COUNTRY DUMMY STATE-OWNED ENTERPRISES UNDERDEVELOPED MARKETS ENTERPRISE FIRM PERFORMANCE TAX RATES MARKET LOCAL CURRENCY GOVERNMENT EXPROPRIATION COMPANY REGULATION FINANCIAL OBSTACLE DIVERSIFICATION CITIZENS GOVERNANCE EXPOSURE INSURANCE SOCIAL CAPITAL TAXATION MANUFACTURING INDUSTRIES ECONOMIC DEVELOPMENT STATE INVESTOR GOVERNMENT OWNERSHIP FIXED ASSETS SECURITY FINANCIAL DEVELOPMENT LEGAL SYSTEM FINANCIAL MARKET GROWTH RATE INVESTMENT FINANCIAL INTERMEDIATION SHARE INVESTOR PROTECTION GOVERNANCE INDICES FINANCIAL INFORMATION SALES GROWTH BUSINESS ENVIRONMENT BANKING BUSINESS LICENSING INSTITUTIONAL DEVELOPMENT FOREIGN COMPANIES LAW INVESTMENTS EXTERNAL FINANCING CORPORATE DISCLOSURES SMALL FIRMS POOR GOVERNANCE AUDIT CUSTOMERS SUPPLIERS FIRM GROWTH STRONG GOVERNANCE CAPITAL INVESTMENT GOVERNMENTS BUSINESS PERFORMANCE SEE FINANCIAL CONSTRAINTS POLITICAL INSTABILITY PRICES COST OF CAPITAL COMPETITION CORPORATE GOVERNANCE Liu, Tingting Ullah, Barkat Wei, Zuobao Xu, Lixin Colin The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| relation |
Policy Research Working Paper;No. 7254 |
| description |
This paper studies the effects of
voluntary accounting information disclosure through auditing
on firm access to finance, exposure to corruption, and sales
growth. Relying on a data set of more than 70,000 firms in
121 countries, the analysis finds that disclosure can be a
double-edged sword. On the one hand, audited firms exhibit a
slightly lower level of financial constraints than unaudited
firms. On the other hand, audited firms face a significantly
higher level of corruption obstacles. The net effects of
voluntary information disclosure on firm growth are
negative, which can largely be explained by the fact that
most of the countries in the sample are developing countries
where institutions are weak. The beneficial effect of
disclosure increases as a country’s property rights
protection improves. The qualitative results are robust to
considerations of the endogeneity of auditing and to
alternative measures of corruption and financial
constraints. The findings reveal the dark side of voluntary
information disclosure: exposing firms to government
expropriation where institutions are weak. |
| format |
Working Paper |
| author |
Liu, Tingting Ullah, Barkat Wei, Zuobao Xu, Lixin Colin |
| author_facet |
Liu, Tingting Ullah, Barkat Wei, Zuobao Xu, Lixin Colin |
| author_sort |
Liu, Tingting |
| title |
The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| title_short |
The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| title_full |
The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| title_fullStr |
The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| title_full_unstemmed |
The Dark Side of Disclosure : Evidence of Government Expropriation from Worldwide Firms |
| title_sort |
dark side of disclosure : evidence of government expropriation from worldwide firms |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/05/24440274/dark-side-disclosure-evidence-government-expropriation-worldwide-firms http://hdl.handle.net/10986/21989 |
| _version_ |
1764449822093344768 |