The Impact of Appraisal Quality on the Voluntary Disclosure of Asset Revaluation

Abstract

In the wake of the global financial crisis, we compare Korean firms that voluntarily disclosed their revaluation in a timely manner with those that did not. We find that firms are more likely to disclose revaluation when they hire a large, reputable appraisal firm and when they have a large number of revaluation increments. We observe a significantly positive market reaction to the voluntary disclosure of the revaluation results. A positive market reaction is mainly observed for firms that hired a large, reputable appraisal firm, had a large number of revaluation increments, and were under greater financial distress before revaluation.