Corporate Disclosure, Market Valuation, and Firm Performance

In this paper, I study the relationship between the Association for Investment Management and Research disclosure rankings and several corporate performance measures. I find a positive relationship between these rankings and stock returns. Furthermore, disclosure rankings are highly correlated with firm value. Specifically, Qs of firms ranked at the top of disclosure rankings are 35% higher than those of firms ranked at the bottom. I also find positive associations between disclosure rankings and future net profit margins, sales growth, and research and development intensity. Finally, I document a positive correlation between changes in disclosure rankings and future earnings surprises.