Is Voluntary Disclosure Value Relevant? Evidence from Italian Listed Companies

The paper aims to assess the level of voluntary disclosure in companies listed on the Italian Stock Exchange and understand the relationship between the quality of voluntary disclosure and market value of Italian listed companies. Voluntary disclosure refers to the discretionary release of financial and non-financial information, which companies are not obliged to disclose by accounting standard setting bodies. In particular, this paper analyzes the effect that disclosure of voluntary information could have on the stock market value of Italian listed companies. To do this, 203 annual reports of Italian listed companies for the year 2012 were analyzed. A voluntary disclosure index is created to measure the extent of disclosure. The index is used in an ordinary least squares model, as a dependent variable, to understand relationships between the above-mentioned determinants. The disclosure score is composed mainly of 38 items per firm. A total of 7,714 items were collected and analyzed. Results show the level of voluntary disclosure provided by Italian listed companies in their 2012 annual reports positively and significantly affect the value relevance of Italian listed companies