Investigating of the nonlinear relationship between voluntary disclosure and firm value by the use of PSTR model

The value of the company is the result of various management actions and decisions. At the same time, it is an indicator of how the market perceives the company that is derived from the extent and manner of disclosing information. This study seeks to provide a non-linear model of the relationship between voluntary disclosure and firm value in the presence of factors that are expected to have a similar capability to reduce information asymmetry or to influence the value relevance of voluntary disclosure. Accounting conservatism, product market competition, cash holding levels, corporate governance and macroeconomic instability were considered according to the theoretical and empirical literatures and using the panel smooth transition regression model (PSTR), the existence of a nonlinear relationship in the presence of each of these variables was investigated. The results of analysis of 124 companies listed in Tehran Stock Exchange during 2013 to 2016 showed that accounting conservatism, cash holding level and macroeconomic instability variables are able to establish a nonlinear relationship between voluntary disclosure and firm value but the presence of cash holding level variable has more power in explaining the optimal relationship. Also, the effect of voluntary disclosure of information at low cash levels is negative, but for values greater than 0.152, this effect is reversed and has a positive effect on firm value.