Controlling owner and transparency: Information transparency and disclosure rankings system

In response to the publicʹs growing concern about low transparency and disclosure quality, the Taiwan Securities and Futures Institute (SFI) currently launched "Information Transparency and Disclosure Rankings System"(ITDRS). Based on the sample of ITDRS, this study explores whether the likelihood of firms being selected as transparent companies by SFI varies with the ownership structure, measured by the degree of the divergence between the ultimate ownerʹs control and the equity ownership level. We also examine whether market gives greater market premium for firms ranked as more transparency by SFI. As predicted, we find that firms with more control divergence, family-controlled companies or firms with greater percentage of supervisors affiliated with controlling owner are more likely to be selected as opaque companies. We also find that transparent companies are more highly valued than opaque companies. The results remain unchanged after controlling for self-selection bias by using treatment effect model.