The Voluntary Disclosure of Financial Information on the Internet and the Firm Value Effect in Companies Across Latin America

Abstract

Society has been imposing standards of ethical behavior on the corporations, above all as regards the degree of transparency of information about their activities being made available to the public. At the same time the world has gone through changes because of the Information Age. The old paradigms of communication have been definitely broken, bringing about changes in the day-to-day of the corporations. Thus the companies are increasing the use of the Internet as a means of investor relations. By that they present a greater degree of corporate transparency to the market, which may maximize value for the shareholders. Studies have evaluated that the practice of Corporate Governance adopted by Latin American companies is still in the beginning (La Porta et al. 2000 and Gibson, 2002). Also the scientific production about that theme is still very discreet in Latin America. Thus being, the objective of this article is to verify the existence of association between the disclosure of financial information using the Web (INFO) by Latin American companies and the firm value as measured by the Tobin's Q Ratio (Q). The study consists of a cross-section based on data from a group of 150 companies selected randomly and stratified considering the environment of the Stock Exchanges in Argentina, Brazil and Mexico in 2002. Multivariate analysis has made evident the existence of significant association between the firm value and the voluntary Disclosure of Financial Information. The results have also revealed that this association could vary according to the Industry sector (SECT) of the company or also its size (SIZE). It has also been observed that it is irrelevant the country (COUNT) in which the company operates to the association between the voluntary disclosure of financial information on its web page and the firm value.