Impact of Transparency and Disclosure (TD) on the Market Valuation of the Firms in India: The Moderating Role of Competition

Abstract

The competitive business environment is new world order, which applies to firms worldwide. Corporate transparency and disclosure (CTD) impact the market valuation of the firms. However, the impacts of CTD on the value in the competitive business environment are not explored well, which is the current study’s aim. Panel data of 76 diversified Indian firms are gathered. The sample (76 firms) is shortlisted from the BSE 100 index for 10 years (2010–2019). The static panel data are applied to the data. It is found that competition negatively (the learners’ index is an inverse proxy of competition) moderates the CTD’s impact on the valuation of the firms. This finding implies that a low level of competition in the business environment enhances the CTD’s impact on the firm’s valuation more than a high level of competition. Moreover, no other study finds a nonlinear positive association of CTD on the valuation and the moderation by competition. The study’s unique outcomes that CTD is effective for valuation only when it reaches a threshold level (found through nonlinear association) and a low level of competition can enhance CTD’s impact on the valuation is a significant contribution of the study.