In a groundbreaking paper that analyzes transparency in firms from the Baltic states of Estonia,Latvia,and Lithuania,CEIBS Professor of Accounting Yuan Ding and two coauthors offer invaluable information for anyone eying newly democratized nations as possible investment locations.

The paper, entitled Firm-Level Transparency in the Former East Bloc: Empirical Evidence from the Baltic Region, has been  uploaded in four journals on the Social Science Research Network (SSRN). Prof. Ding's coauthors are Associate Professor Ole-Kristian Hope from the University of Toronto's Joseph L. Rotman School of Management, and Professor Hannu Schadewitz from the Turku School of Economics' Department of Accounting & Finance.

The three collaborated on the first study to systematically examine the financial disclosure practices of Baltic firms. Prof. Ding et al argue that given the general consensus (based on earlier works) that transparency is essential for the functioning of efficient capital markets, disclosure may play a major role in newly democratized nations lacking a tradition of transparency in financial reporting.

In comparing the disclosure practices among 60 Baltic firms and the same number of their counter-parts from the Nordic region, and assessing the economic consequences of these two approaches, the study measures f inancial t ransparency as well as ownership and governance disclosures. The findings show that Baltic firms are less financially transparent than Nordic companies.The difference is even more noticeable when information on ownership and governance structures is added to the mix. "We further find that in the Nordic countries, both measures of disclosure are significantly negatively associated with stock price volatility, our measure of economic consequences. In contrast, it is only the broader measure of disclosure that relates negatively to stock price volatility in the Baltic countries," write Prof. Ding, et al.

The paper has been extremely popular among users of the Social Science Research Network (SSRN),and was among the Top 10 most downloaded articles in four SSRN journals between March 19 and May 18, 2008.It was the fifth most popular download in the Journal on International Subject Matter, the Journal of International Management & Business, and the Journal of MRN International Business Network. It was also number seven on the list of top 10 downloads from the Journal of Behavioral & Experimental Accounting. Total downloads of all papers by Prof. Ding on SSRN have exceeded 1,080.