Corporate disclosure behavior during financial crises: evidence from korea

Abstract

We examine corporate disclosure patterns according to changes in firm states during financial crises in Korea. Using panel data on Korean listed firms during 1995–2019, we first confirm that they transparently (opaquely) disclose information when a change in return on assets is positive (negative) during crises. Moreover, we check that these disclosure patterns increase debt financing, and are ineffective for equity financing. Finally, for chaebols with internal capital markets, we find that receivers of internal capital offer transparent (opaque) disclosure of negative (positive) changes in their states. By contrast, providers show the opposite patterns.