Corporate Websites: A New Measure of Voluntary Disclosure
51 Pages Posted: 14 Apr 2021
Date Written: July 26, 2019
We construct a new measure of voluntary disclosure based on ﬁrms’ websites. Using the Wayback Machine, we create a standardized measure of disclosure capturing the quantity of information on ﬁrms’ websites. We validate our measure by documenting that it is positively associated with established measures of ﬁrms’ voluntary disclosure and liquidity. Importantly, we document that our measure, while correlated with established disclosure measures, is not subsumed by those measures. It complements existing measures in three important ways. First, our measure captures not only capital-market-related but also additional information geared toward stakeholders other than investors (e.g., customers). Secondly, our measure can be calculated for a broader sample of ﬁrms, including small, private, and international ﬁrms. Lastly, our measure can be customized to ﬁt the speciﬁc research question at hand (e.g., ESG disclosures) via textual analysis of website content.
Keywords: Internet, Websites, Communication, Disclosure, ESG
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