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Effects of Financial and Non-Financial Information Disclosure on Prices’ Mechanisms for Emergent Markets: The Case of Bucharest Stock Exchange

Author

Listed:
  • Bogdan DIMA

    (West University of TimiSoara, Romania)

  • Ioan CUZMAN
  • Stefana DIMA (CRISTEA)

    (Vasile Goldis Western University of Arad, Romania)

  • Otilia SARAMAT

    (West University of Timisoara, Romania)

Abstract

This paper investigates the impact of publicly disclosed information on market values for Romanian companies listed on Bucharest Stock Exchange, using as benchmark a more developed market, the Madrid Stock Exchange. The study is motivated by the European Union’s decision to require the use of the International Financial Reporting Standards for the consolidated financial statements of all listed companies (Regulation EC 1606/2002) and by the 2007 Romanian adoption of the Markets and Financial Instruments Directive (MiFID) - which is the cornerstone of the European Commission’s Financial Services Action Plan. Thus, we compare the value relevance of Internet disclosed information provided by annual and interim financial reports and other non-financial news in the decision making process of investors. In order to evaluate the overall impact of information disclosure, we built a global disclosure indicator according to the so-called Principal Components Analysis by including individual disclosure dummies. Empirical tests support our research hypothesis according to which there is a relative incremental value of a higher volume and a better quality of information, reflecting prices’ overreactions even in the case of a market with imperfect trading mechanisms.

Suggested Citation

  • Bogdan DIMA & Ioan CUZMAN & Stefana DIMA (CRISTEA) & Otilia SARAMAT, 2013. "Effects of Financial and Non-Financial Information Disclosure on Prices’ Mechanisms for Emergent Markets: The Case of Bucharest Stock Exchange," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 12(1), pages 76-100, March.
    • Handle: RePEc:ami:journl:v:12:y:2013:i:1:p:76-100
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    Citations

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    Cited by:

    1. MiloÅŸ Laura Raisa & MiloÅŸ Marius Cristian, 2018. "Accounting Disclosure and Stock Market Reaction. Empirical Analysis on Bucharest Stock Exchange," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 643-648, December.
    2. Hesham Abdelghany, 2015. "The effect of accounting disclosure quality and information asymmetry on the stock market activity ? an applied study on listed companies in the Egyptian stock market," Proceedings of International Academic Conferences 2704127, International Institute of Social and Economic Sciences.
    3. Tereza Gluzová, 2016. "Disclosure of Subsidiaries with Non-controlling Interest in Accordance with IFRS 12: Case of Materiality," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(1), pages 275-281.
    4. Laura Saraite-Sariene & Juana Alonso-Cañadas & Federico Galán-Valdivieso & Carmen Caba-Pérez, 2019. "Non-Financial Information versus Financial as a Key to the Stakeholder Engagement: A Higher Education Perspective," Sustainability, MDPI, vol. 12(1), pages 1-19, December.

    More about this item

    Keywords

    Disclosure; Valuation; Bucharest Stock Exchange; Madrid Stock Exchange;
    All these keywords.

    JEL classification:

    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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