The effect of voluntary disclosures and corporate governance on firm value: a study of listed firms in France

This study examines how voluntary disclosures (VD) and corporate governance (CG) improve firm value through the moderating effect of a legal change in a continental context, namely France. Based on a sample of 1001 observations of French firms listed on the SBF 120 from 2006 to 2016, I experiment with the theoretical assumptions of the study. A generalized method of moments estimation was used to neutralize the endogeneity problem. I estimated five different models on the whole sample; then I tested these models by splitting the sample into sectors to check the robustness of our estimations. Findings show that voluntary disclosure is positively associated with the firm's value. The empirical results also indicate that a change in the law, as a moderate variable, helps to widen the firm's benefit by the development and improvement in its sound governance system. Moreover, this outcome is reliable with the view that the nexus between VD and CG can add value for the firm in the presence of favourable jurisdictions. This research provides guidelines for investors, managers and policymakers to increase firm value by the application of the best practices of VD and CG in the presence of an advantageous law. To improve their reliability and performance, firms adopt a good mechanism of governance that is harmonious with the law and disclose more voluntary information to attract investors. These results offer new insights to the voluntary disclosure and firm value literature. I suggest that the application of the directive 2013/34/EU improves the corporate governance system. Also, the quality aspect of information disclosed in annual reports increases the firm value. Second, I investigated the interaction between VD and firm value in the presence of a CG mechanism and interaction variables.