Faculty of Business Administration
Visiting Scholar Seminar
The Transparency Premium
Dr. Bin MIAO
Associate Professor of Accounting
The Chinese University of Hong Kong, Shenzhen
Date: 15 December 2020 (Tuesday)
This paper proxies transparency by the disclosure quality of profitability (DQP), which is measured as the level of disaggregation of income statement accounts. DQP is positively related to stock returns in the cross section. This return premium is not explained by risk or the quality of a firm’s corporate governance. Firms with higher DQP have higher subsequent profitability and valuation. DQP decreases when a tariff shock increases product market competition, suggesting that managers introduce opacity into the income statement accounts when faced with declining profitability. Overall, DQP contains valuable incremental information regarding future firm performance.
Dr. Bin Miao is an Associate Professor of Accounting at The Chinese University of Hong Kong, Shenzhen. Before joining CUHK Shenzhen, he taught at The Hong Kong Polytechnic University and National University of Singapore, and worked at Institute of Singapore Chartered Accountants as Director of Research. His research interests include corporate disclosure, empirical asset pricing, and market microstructure with a focus on the mechanisms through which accounting information is incorporated into stock prices. His research has been published in leading academic accounting journals such as Journal of Accounting Research, Journal of Accounting and Economics, and Review of Accounting Studies. Dr. Miao obtained his Bachelor’s degree (Business Administration) from Tianjin University in 2003, and PhD (Accounting) from Nanyang Technological University in 2007. He is also a CFA Charter holder.