Assessing the Relationship Between Corporate Financial Transparency and Market-Based Performance Evaluation Metrics

Posted: Sep 03, 2023

• Elizabeth Brown
• Elizabeth Green
• Elizabeth Hernandez

Abstract

The relationship between corporate financial transparency and market-based performance metrics represents a fundamental area of inquiry in financial economics and corporate governance. Traditional research in this domain has largely approached transparency as a unidimensional construct measured through disclosure indices, regulatory compliance scores, or analyst coverage metrics. However, the digital transformation of financial markets and the proliferation of alternative data sources have fundamentally altered how transparency manifests and influences market dynamics. This research addresses critical gaps in the existing literature by developing a novel methodological framework that captures the multi-dimensional nature of financial transparency and its complex, non-linear relationship with market performance. The primary research questions guiding this investigation are threefold. First, how can financial transparency be quantitatively measured in a manner that captures its multi-dimensional nature across different communication channels and stakeholder groups? Second, what is the precise nature of the relationship between transparency levels and market-based performance metrics, and does this relationship exhibit non-linear characteristics or threshold effects? Third, can advanced computational methods, particularly those inspired by quantum computing principles, enhance our predictive capabilities regarding market reactions to transparency changes?