Main Article Content
The issue of corporate governance has prompted calls for greater transparency and disclosure on companies around the world. As a result, a disclosure ranking system, Information Transparency and Disclosure Ranking System (ITDRS) was launched in Taiwan since 2003 by the request of Taiwan Stock Exchange Corporation (TSEC). This paper examines the relationship between information transparency and the informativeness of accounting earnings. The empirical tests are conducted using TEJ database for firms listed on the Taiwan Stock Exchange with fiscal year ends between 2003 and 2004. Empirical results indicate that, information transparency, measured by the ranking of ITDRS, reduces the informativeness of accounting earnings. However, if information transparency is measured by the ratio of long-term investment in stocks, evidences show higher earnings response coefficients (ERC) for the more transparent firms. The results suggest that accounting numbers are more useful or valuable than the ITDRS ranking results from investors’ perspective. It also suggests that the ITDRS may be not a good proxy for financial transparency.