Disclosure tone, corporate governance and firm value: evidence from Egypt

This study examines the extent to which corporate governance (CG) affects disclosure tone (DT) and assesses the impact of DT on firm value (FV). It also tests the effect of CG on FV using DT as an intermediary variable. Content analysis is used to measure DT level. CEO duality, board size, gender diversity, and board independence are used as proxies for CG. Tobin's Q is used to measure FV. The empirical analysis shows significant positive impact of CG on DT and FV. We also find a highly significant association between disclosure of good/bad news with leverage, audit quality, firm growth, and abnormal accruals. The results also indicate that DT along with the profitability of the firm (ROA) and Abnormal Accruals are significantly associated with FV. Finally, the results of the structure equation modeling show that gender diversity, ROA, leverage, revenue growth, and abnormal accruals are the most influential variables that run from CG and DT into FV. The novelty of this study stems from its empirical analysis that tests the association between CG, DT from one side and DT and FV from the other side, and then measures the impact of CG on FV using DT as an intermediary variable.