Corporate financial disclosure in emerging markets: Does economic development matter?

This paper breaks with previous research by concentrating on emerging market economies rather than developing countries. It tests the relationship between corporate financial disclosure and the sophistication of economies and capital markets within the context of the extant Cooke and Wallace (1990) model. It finds that, as posited in the model, firms in developed market economies have a significantly higher mean level of effective disclosure than those in emerging market economies. These differing levels of disclosure are modified by the importance of capital markets and a relatively low level of the uncertainty avoidance culture variable. The study also finds that the level of corporate disclosure is positively related to prior levels of corporate financial disclosure regulation and is directly related to the ability to draw future foreign portfolio investment.