Liu, TingtingUllah, BarkatWei, ZuobaoXu, Lixin Colin2015-06-022015-06-022015-05https://hdl.handle.net/10986/21989This paper studies the effects of voluntary accounting information disclosure through auditing on firm access to finance, exposure to corruption, and sales growth. Relying on a data set of more than 70,000 firms in 121 countries, the analysis finds that disclosure can be a double-edged sword. On the one hand, audited firms exhibit a slightly lower level of financial constraints than unaudited firms. On the other hand, audited firms face a significantly higher level of corruption obstacles. The net effects of voluntary information disclosure on firm growth are negative, which can largely be explained by the fact that most of the countries in the sample are developing countries where institutions are weak. The beneficial effect of disclosure increases as a country’s property rights protection improves. The qualitative results are robust to considerations of the endogeneity of auditing and to alternative measures of corruption and financial constraints. The findings reveal the dark side of voluntary information disclosure: exposing firms to government expropriation where institutions are weak.en-USCC BY 3.0 IGOGROWTH RATESLINE OF CREDITDEPOSITLINES OF CREDITCOMPETITORSRED TAPEINSTITUTIONAL ENVIRONMENTFINANCIAL MARKET DEVELOPMENTFINANCINGINFORMAL SECTORCOUNTRY FIXED EFFECTSINCOMEFOREIGN OWNERSHIPCONSUMER PRICE INDICESPRIVATIZATIONGOVERNMENTPROPERTY RIGHTSEXCHANGELIQUIDITYDEVELOPING COUNTRIESTAX COLLECTIONPOLITICAL ECONOMYCAPITAL STRUCTUREWORLD DEVELOPMENT INDICATORSCOMPANIESFINANCIAL STATEMENTSINFORMATION SHARINGLOANFINANCIAL STATEMENTFIRM SIZEPRICETAXCORRUPTIONINVESTMENT OPPORTUNITYDISCLOSUREINDEPENDENCEBANK LENDINGEXTERNAL FINANCESMALL BUSINESSSTATESFUTURE PROSPECTSSTATE OWNERSHIPCREDIT RATINGSLEGAL CONSTRAINTSCURRENCYINITIAL PUBLIC OFFERINGSMARKET DEVELOPMENTFINANCIAL INSTITUTIONREAL GROWTH RATEFOREIGN COMPANYFINANCIAL OBSTACLESCORPORATE FINANCEMARKETSFIRMGOVERNANCE INDICATORSLENDERSPRIVATE SECTOR DEVELOPMENTECONOMIC REFORMSLICENSINGENTERPRISESTAX COLLECTIONSAGENCY COSTSCAPITAL INVESTMENTSFINANCIAL HEALTHTAXESINFORMATION ASYMMETRYINVESTMENT DECISIONSEXPENDITURECLIENTFISCALINVESTORSFIRMSINDIVIDUAL FIRMECONOMIC PERFORMANCEBUSINESS ENVIRONMENTSOWNERSHIP STRUCTURETRANSPARENCYSTATE GOVERNMENTFINANCIAL CRISISSTARTUPSPARTIESFUTUREREPUTATIONCOUNTRY DUMMYSTATE-OWNED ENTERPRISESUNDERDEVELOPED MARKETSENTERPRISEFIRM PERFORMANCETAX RATESMARKETLOCAL CURRENCYGOVERNMENT EXPROPRIATIONCOMPANYREGULATIONFINANCIAL OBSTACLEDIVERSIFICATIONCITIZENSGOVERNANCEEXPOSUREINSURANCESOCIAL CAPITALTAXATIONMANUFACTURING INDUSTRIESECONOMIC DEVELOPMENTSTATEINVESTORGOVERNMENT OWNERSHIPFIXED ASSETSSECURITYFINANCIAL DEVELOPMENTLEGAL SYSTEMFINANCIAL MARKETGROWTH RATEINVESTMENTFINANCIAL INTERMEDIATIONSHAREINVESTOR PROTECTIONGOVERNANCE INDICESFINANCIAL INFORMATIONSALES GROWTHBUSINESS ENVIRONMENTBANKINGBUSINESS LICENSINGINSTITUTIONAL DEVELOPMENTFOREIGN COMPANIESLAWINVESTMENTSEXTERNAL FINANCINGCORPORATE DISCLOSURESSMALL FIRMSPOOR GOVERNANCEAUDITCUSTOMERSSUPPLIERSFIRM GROWTHSTRONG GOVERNANCECAPITAL INVESTMENTGOVERNMENTSBUSINESS PERFORMANCESEEFINANCIAL CONSTRAINTSPOLITICAL INSTABILITYPRICESCOST OF CAPITALCOMPETITIONCORPORATE GOVERNANCEWorking PaperWorld Bank10.1596/1813-9450-7254