Mandatory Disclosure of Corporate Governance Reports and Corporate Value

[Purpose]This study analyzed whether mandatory disclosure of corporate governance reports significantly impacts corporate value. Additionally, it analyzed whether there was a difference in the relationship between tax avoidance and corporate value between companies that disclosed corporate governance reports after the implementation of the mandatory disclosure system and those that did not. [Methodology]This study sampled 2,905 company－years listed on the stock market from 2015 to 2020. To test hypotheses, this study used propensity score matching (PSM) to extract a homogeneous sample of companies that disclosed reports and those that did not. The discretionary BTD was used to measure tax avoidance, and the dependent variable, corporate value, was measured using Tobin’s Q. [Findings]The results of this study are as follows. First, companies that disclosed their corporate governance reports after the implementation of the mandatory disclosure system showed higher corporate value than those that did not. This is explained by the fact that mandatory disclosure of corporate governance reports mitigates information asymmetry between investors and companies, positively impacting corporate value. Additionally, companies that disclosed their corporate governance reports after the implementation of the mandatory disclosure system showed a weakened negative relationship between tax avoidance and corporate value. [PolicyImplications]This study demonstrates that the mandatory disclosure system for corporate governance reports has achieved its original purpose of enhancing corporate value. Furthermore, it offers policy implications, supporting the government’s policy of expanding the scope of disclosure for corporate governance reports.