Voluntary Disclosure and Equity Financing in Brazil Divulgação Voluntária e Financiamento Patrimonial no Brasil

: The objective of this study was to verify whether, in the Brazilian market, voluntary disclosure is able to increase the amount of equity financing through shares issuance of nonfinancial companies listed on the Brazilian Securities, B3 (Brasil Bolsa Balcão S.A.). Using an unbalance panel data with 1,953 firm-year observations of 290 nonfinancial companies, from 2010 to 2017, we estimated using an econometric model estimated with GMM method. The results indicate that higher levels of voluntary disclosure implicate on higher equity financing, on average. The relevance of this study is to provide empirical evidence of the possibility of increasing the volume of financing through issuing shares by means of voluntary disclosure. Social implications, on the other hand, are the use of empirical results to help investors and regulators in decisions about the market's reaction to voluntary information.


Introduction
The search for new investments is an essential factor for the growth of a company.In this decisionmaking process, choosing an inefficient investment is detrimental to the performance of companies and investors.Therefore, investors make decisions based on the information disclosed by these companies, thus, it is necessary to disclose data with high informational content so that investors can make efficient decisions and with the lowest degree of risk.(Chiu, Jiu, Yu, 2022).
The usefulness of accounting is not restricted to recording, interpreting and disseminating data on existing business processes, but also providing information to support the main activities inherent to the decision-making of companies and investors.In this environment, a company's progress depends on the continuous improvement of its competitiveness, mainly through attracting investors.(Mihaylova & Papazov, 2018).Therefore, the disclosure of good quality financial information is associated with a better representation of companies' performance and value creation.(Chiu et al., 2022;Minutiello & Tettamanzi, 2022).
To define the research object, this article was based on the definition of disclosure based on the discretion of its classification, as proposed by Verrecchia (2001) and Botosan and Plumlee (2002).In this scenario, for Shi, Kim and Magnan (2014) voluntary disclosure is able to reduce information asymmetry and improve the performance of an entity.Thus, this reduction in information asymmetry reduces investors' uncertainties, and may increase funding for an entity (Chung, Goh, Ng, & Yong, 2017;Souza, Lima, Vendramin, & Pereira, 2021).
The high competitiveness of the global stock market, including in Brazil, can prompt firms to adopt various strategies to reduce the cost of capital and attract more financing, to enable them to compete better against rivals.It is logical to assume that reduced information asymmetry through the voluntary disclosure of more information than required will tend to diminish the risk perceived by investors and attract more funding (Chung et al., 2017;Guttman & Meng 2021;Chiu et al., 2022).This is borne out by Gong, Li and Zhou (2013), Allee and Deangelis (2015), Allaya, Derouiche and Muessig (2018), Ofoegbu e Odoemelam, (2018) and Sethuraman (2019), who found that the reduction of information asymmetry achieved via voluntary disclosure tends to increase the confidence of investors.In the same line, according to D'Angelo, El Gazzar and Jacob (2018), Li (2017), Lima et al. (2021);Md Zaini, Samkin, Sharma and Davey (2018) and Rouf and Akhtaruddin (2018) and, through voluntary disclosure a firm can attract more external financing by reducing information asymmetry.
Information asymmetry is one of the assumptions of agency theory.This theory emphasizes the importance of a harmonious and balanced relationship between the company and investors, so that their interests do not conflict.(Jensen & Meckling, 1976).Thus, identifying mechanisms capable of reducing information asymmetry can minimize these conflicts of interest between the company and investors.In this environment, voluntary disclosure is inserted as a tool to reduce both asymmetry and conflicts of interest.
Just as voluntary disclosure can influence the volume of financing, firms with a greater amount of equity capital can decide to increase their voluntary disclosure level.As pointed out by Elfeky (2017), companies with greater financial stability tend to disclose more information voluntarily.Therefore, among
Various studies in the international literature can be mentioned in this respect, such as Chung, Goh, Ng and Yong (2017), who identified that voluntary disclosure reduces the level of uncertainty among investors and increases the funding of companies in Ukraine.In this same line, according to Bourveau and Schoenfeld (2017), voluntary disclosure can attract more equity financing to companies in the United States due to the reduction of information asymmetry and the corresponding lesser risk perceived by investors.For China, Li (2017) also found that voluntary disclosure tends to attract more financing to firms by reducing information asymmetry and increasing investors' confidence.
Most studies in the Brazilian literature have focused on the relationship between the level of voluntary disclosure and the cost of capital, such as Lima (2009), who found evidence that greater voluntary disclosure tends to lower the cost of debt capital.On the other hand, Fernandes (2013) found that the voluntary disclosure of positive or negative information did not influence the cost of debt of Brazilian firms.However, Alsharari and Alhmoud (2019); Louie, Ahmed and Ji (2019); Aly, El-Halaby and Hussainey (2018) and Rufino and Machado (2017) found that the voluntary disclosure of information on social responsibility influenced the cost of capital of listed Brazilian firms, while Consoni, Colauto and Lima (2017) did not find any influence of voluntary disclosure on the earnings management of listed Brazilian companies.
Corroborating this scenario, Jankensgard (2015) mentioned that firms that obtain new external financing (equity or debt) in general have a higher level of voluntary disclosure than firms that obtain less financing, i.e., there is a positive correlation between the volume of external financing and voluntary disclosure level.Mention can also be made of the studies of Kilincarslan, Elmagrhi and Li (2020); Karajeh, Ibrahim and Lode (2017) and Egbunike and Tarilaye (2017), indicating that good economic and financial performance measures can increase firms' level of voluntary disclosure, so that firms that have more Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1684Revista BASEv.20, n.2, abril/junho 2023 external financing tend to have greater propensity for voluntary disclosure.
Therefore, as indicated previously, the literature from Brazil and other countries generally has found that voluntary disclosure can attract more financing to companies because of the lower risk perceived by investors.In this literature, particular mention can be made of Li (2017), focused on the benefit of voluntary disclosure on the projection of future profits in relation to obtaining financing; Bourveau and Schoenfeld (2017), examining the relationship of voluntary disclosure and forecasts of future sales with respect to external financing; and Chung et al. (2017), analyzing the relationship of the quality of the information voluntarily disclosed and the obtainment of financing.
However, none of these researchers performed an in-depth investigation of the influence of voluntary disclosure on the obtainment of financing, or used the issuance of shares as a proxy for the dependent or independent variable to measure the raising of funds, to identify its relationship with voluntary disclosure.
In this respect, we aim to add to the literature by providing evidence about the relationship between voluntary disclosure and equity financing, highlighting the role of voluntary disclosure as a tool to reduce information asymmetry and thus diminish the risk perception and raise the confidence of investors, using share issuance as a proxy.In this line, the voluntary revelation of accounting information has the main goal of reducing information asymmetry between managers and stakeholders, to optimize the performance of firms by increasing the volume of financing (Lima et al., 2021;Bourveau & Schoenfeld, 2017;Oluwagbemiga, 2014).
Based on this panorama, we formulated two research questions: (1) Does the level of voluntary disclosure influence the amount of equity financing of companies?(2) Does the amount of equity financing influence the level of voluntary disclosure of companies?
Therefore, this study examines whether the voluntary disclosure of accounting information can increase the volume of equity financing of firms, and conversely, whether higher equity financing prompts firms to increase their voluntary disclosure.In other words, we investigated whether greater voluntary disclosure has a positive influence on the volume of equity financing and whether having higher equity financing has a positive influence on firms' voluntary disclosure.
In a highly competitive global stock market, companies need strategies to maximize their economic Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1685Revista BASEv.20, n.2, abril/junho 2023 and financial performance, to enable them to compete effectively with their rivals.In this scenario, the existence of information asymmetry reduces the confidence and increases the risk perception of investors (Horvat & Mojzer, 2019;Dawd, 2018;Li, 2017).To counteract this lower confidence and higher risk perception, it is necessary to use mechanisms to reduce the information asymmetry between managers and investors.Voluntary disclosure can serve this purpose, thus attracting more financing and maximizing firms' economic and financial performance.
As a theoretical contribution, the results of this study, both in the national and international contexts, complement the existing empirical data about the relationship between voluntary disclosure and equity financing.And as a practical contribution, the results provide useful empirical evidence to companies and investors that voluntary disclosure is a tool able to increase the volume of equity financing and optimize firms' economic and financial performance.
The results are based on a sample composed of all the nonfinancial firms listed on the B3 Exchange (290 companies) between 2010 and 2017 (eight years), for a total of 1,653 observations in the initial sample.The main results were that: (i) the greater the level of voluntary disclosure, on average, the higher was the amount of equity financing of the nonfinancial companies listed on the B3; and (ii) the greater the amount of equity financing, on average, the greater was the level of voluntary disclosure of the nonfinancial companies listed on the B3.

Theoretical Framework Voluntary Disclosure and External Financing
Stock market companies that have undervalued shares disclose voluntary information to a lesser extent.In this regard, the stock market reacts positively to the high level of voluntary disclosure and the low asymmetry of information.(Benlemlih, Ge, & Zhao, 2021).Along the same lines, for Chiu et al. (2022), companies that have a higher level of voluntary disclosure are more likely to obtain new financing than those with a lower level of voluntary disclosure.
Disclosure is classified as mandatory or voluntary, the first originated by virtue of a set of rules and legal obligations and the second, based on information that is not required by law and stems from the company's discretionary decision (Souza et al., 2021) (Bourveau & Schoenfeld, 2017).This effect operates because voluntary disclosure enhances the credibility of the information revealed, as pointed out by Chung et al. (2017); Allee and Deangelis (2015) and Gong, Li and Zhou (2013).In other words, voluntary disclosure of more information than required increases the perceived reliability of financial reports among users of accounting information.
According to Li and Yang (2016) and Consoni and Colauto (2016), the adoption of International Financial Reporting Standards (IFRS) increased the level of voluntary disclosure of information by companies.Therefore, in a market characterized by constant changes in the economic scenario, more firms decide to disclose information voluntarily because they perceive this as a way to gain a competitive advantage (Zarb, 2015).According to Shroff, Sun, White and Zhang (2013) and Sun, Yi and Lin (2012), voluntary disclosure reduces the level of information asymmetry.In this context, for Lima et al. (2021); Shi, Kim and Magnan (2014); Balakrishnan, Billings, Kelly and Ljungqvist (2014) the reduced information asymmetry due to voluntary disclosure can improve firms' performance, by diminishing the uncertainties of investors, and thus can increase external financing (Chung et al., 2017).
According to Frenkel, Guttman and Kremer (2020) and Chen, Srinidhi, Tsang and Yu (2016), firms that have their accounting reports audited regularly have a higher level of voluntary disclosure.In other words, higher quality of the accounting information is associated with a larger quantity of information voluntarily disclosed.In this respect, for the information voluntarily disclosed to be useful to the users of that information, it must have relevant content, able to affect the decision-making process of stakeholders (Chen, Gavios, & Lev, 2017;Nelson & Pritchard, 2016).
According to Wen (2013), by conveying value-relevant information to the market, voluntary disclosure leads to more accurate pricing, since the market is able to price in the benefit of the investment, which enables a firm to obtain more external financing.With respect to the relationship between the financial capacity of firms and their level of voluntary disclosure, Jankensgard (2015) found that financially strong companies tend to reveal more information voluntarily than do firms that are financially weaker, and companies that obtain new financing (debt or equity) tend to have higher voluntary disclosure than their peers that do not obtain new financing.
Nevertheless, although the voluntary disclosure of information can positively affect the obtainment Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1687 Revista BASEv.20,n.2, abril/junho 2023 of external financing, not all companies use this tool to maximize their economic performance.In particular, voluntary information disclosure is not always seen as important by Brazilian companies (Consoni, Colauto, & Lima, 2017;Voges, Broietti, Rover, 2021).Although, many companies use voluntary disclosure as a source of competitive advantage among competitors, as highlighted by Lima et al. (2021), maximizing the levels of voluntary disclosure of companies can promote the reduction of information asymmetry between market agents and, consequently, increase the levels of confidence for investment by these companies.

Voluntary Disclosure and Performance Measures
With respect to the relationship of voluntary disclosure with accounting measures of organizational performance, Abdi, Kacem and Omri (2018), Consoni and Colauto (2016), Egbunike and Tarilaye (2017), Haddad, Shibly and Haddad (2020), Karajeh, Ibrahim and Lode (2017), Lan, Wang and Zhang (2013), Said, Abdul Rahim and Hassan (2018) and Wardhani (2019) and all found evidence that greater financial leverage and larger size are positively related with voluntary disclosure.In turn, Egbunike and Tarilaye (2017) found a positive relationship between voluntary disclosure and earnings per share and corporate governance level.In other words, firms with greater voluntary disclosure tend to have higher earnings per share and better corporate governance.In this same context, voluntary disclosure has also been found to be positively related with return on assets (Lan, Wang, & Zhang, 2013;Rufino & Machado, 2017).
According to Schoenfeld (2017) and Consoni and Colauto (2016), voluntary disclosure increases the liquidity of a firm's shares.This means to say that through voluntary disclosure of information, a firm can increase the value of its assets.In this same panorama, for Balakrishnan et al. (2014), firms actively seek to shape their information environments by voluntarily disclosing more information than required, and those efforts improve the liquidity of their shares, and as a result maximize the results and raise the firm valuation.
Larger firms tend to provide more information on corporate governance to the market (Silva & Onusic, 2014).Likewise, companies recognized for adopting the best corporate governance practices supply more voluntary information to stakeholders (Consoni & Colauto, 2016;Lima et al., 2021;Silva & Onusic, 2014).

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Revista BASEv.20, n.2, abril/junho 2023 Besides studies indicating the effect of voluntary disclosure on determined variables, the literature also brings evidence about the variables that influence voluntary disclosure.In this context, Costa, Santos, Gomes and Guimarães (2021) and Elfeky (2017) reported a significant positive correlation between firm size, profitability and financial leverage on the one hand and voluntary disclosure on the other.

Development of the research hypotheses
To attain the objectives of this study, of investigating if voluntary disclosure tends to increase the volume of equity financing of firms, and conversely, whether firms that have higher levels of equity financing tend to disclose more voluntary information, we formulated two hypotheses referring to the independent variable of interest, (H1) described below, preceded by the theoretical justification.
By means of voluntary disclosure, a company can attract greater external financing (Bourveau & Schoenfeld, 2017;Li, 2017).Further in this context, according to Chung et al. (2017), voluntary disclosure, by reducing information asymmetry, can make firms more attractive to investors, thus increasing the amount of equity financing.Hence, the expectation is that voluntary disclosure will tend to increase the amount of funding obtained by firms via stock issues.
H1.The level of voluntary disclosure influences positively the amount of equity financing obtained by firms.

Methodology Sample
We started the sample with all nonfinancial firms listed on the B3 Exchange, we excluded firmyear observations with negative book-value due to the fact that companies with negative book-value could distort the data, generating a biased result, different from the real result that is intended to be achieved.
Then we eliminated firm-year observations with missing information of the variables needed to estimate the econometric model.To eliminate estimation bias due to influence of outliers, all variables were winsorized at 1% level on both sides.
The final sample contains 1,953 firm-year observations, it is an unbalanced panel data of 290 Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1689 Revista BASEv.20,n.2, abril/junho 2023 nonfinancial companies, from 2010 to 2017.The panel data of all nonfinancial companies with available data from Economatica allows a panel analysis, which makes a more detailed analysis on the subject and raise the level of statistical inference, increasing the robustness of the results.
The year 2010 was chosen as the starting year because it was the first year when the Brazilian Securities Commission (CVM) required listed companies to publish the Reference Form (Formulário de Referência), which was used as the source of data to construct the voluntary disclosure index, while 2017 was the last year the form was available.The data were collected with the support of the Economatica software.
Financial companies were excluded from the sample because they have very specific characteristics (including different accounting rules) that set them apart from other companies, so their inclusion would have biased the results.The exclusion of companies from the financial sector from the sample due to the peculiarities of their operations, distinct financial structure and special accounting and governance procedures, is a method widely used by research in the area of finance, a procedure which is in line with research by Lima et al. (2021); Costa et al. (2021) and Murcia and Santos (2009).

Econometric model and method
To test the research hypothesis, that the level of voluntary disclosure influences positively the amount of equity financing obtained by firms, we use the econometric model presented at Equation (1).
The model was estimated by the Generalized Method of Moments (GMM) with robust errors and year fixed effects.The choice to use the GMM method is due to the possible simultaneous relation between the level of voluntary disclosure and the amount of equity financing obtained by firms, that can cause endogeneity problems.
it is the equity financing of firm  at year  and   it is the level of voluntary disclosure of firm  at year .According to the research hypothesis H1, it is expected that  1 is positive, indicating that higher levels of voluntary disclosure generate higher equity financing.
Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1690 Revista BASEv.20, n.2, abril/junho 2023 According to Li (2017), one of the main motives for companies to reveal more information is the need to obtain financing from the capital market, such as by issuing shares.Therefore,   is measure as the natural logarithm of the issuing shares of firm  at year .
The level of voluntary disclosure was measure based on the amount of information voluntarily disclosure in the Reference Form of the companies available at the Brazilian Securities Commission (CVM) website.We chose the Reference Form to measure voluntary disclosure because, besides containing the information required by the CVM, it is the main vehicle used by firms for voluntary disclosure of additional information.
The measure of voluntary disclosure was calculated based on the index created by Murcia and Santos (2009).Murcia and Santos (2009)'s index was created based on 92 types of information divided in two dimensions: social-environment (49) and economic (34).In this study we focused only on the economic dimension.
The economic dimension of Murcia and Santos (2009)'s index is divided in 6 categories and 34 subcategories: business environment (8), operating activity (8), strategic information (8), financial information (7), financial ratios (4) and corporate governance (8), as shown at Table 1.Therefore,   is the percentage of the economic subcategories disclosed by the firm  at the year .
Subcategory No. 16: Accounting information in US GAAP or IFRS was maintained to measure the Voluntary Disclosure proxy.Because, despite the mandatory adoption of the IFRS standard for Brazilian companies, since 2010, an attempt has been made to capture the discretion of companies that voluntarily adopt the US GAAP standard.
To control for other factors that can influence equity financing and avoid omitted variables endogeneity problems and assure a robust estimated model, we included five control variables (those most often used in the previous literature) as shown at Table 2 (2016).

CLIQ Current Liquidity
Ratio of current assets over current liabilities of each company.
The subjectivity in the process of building the proxy for voluntary disclosure should be taken into account, since the selection criteria, although scientifically established by previous research, is done through the judgment of the researchers.It is also noteworthy that the equity financing variable (issuance of shares) used in this study is capable of capturing financial resources for an entity, through the use of the company's own resources.In other words, the research did not consider the relationship between voluntary disclosure and financing through third-party resources, such as loans, for example.
However, it is understood that the scope of the equity financing variable (obtained through own resources) that was used by this study is greater than the variable that was not considered by this study

Results
Table 3 presents the descriptive statistics of the variables used to estimate the model presented at Equation (1).VDISC presents an average of 60.28% showing the firms on our sample disclose more than 50% of the economic subcategories, on average.The maximum disclose is 88%, thus no firm in our sample disclosed all subcategories.Even after a 1% level winso,rization the variable ROA presents a high standard deviation, probably due to outliers.1).The model was estimated using the GMM method, with robust errors and year fixed effects.The number of observations decreased to 1,953 because we used the lag of the dependent variable as an independent variable to control other non-observed factors that could be affecting the Equity Financing (EF).VDISC estimated coefficient it is positive and statistic significant at 5%, indicating that higher levels of voluntary disclosure implicate on higher equity financing, on average.Confirming our research hypotheses.
The estimated coefficient value  1 ̂= 0,0081 implies that 1% voluntary disclosure increase implicates on a 0,81% increase on the number of issuing shares.This result corroborates the evidence found by Lima et al. (2021), Bourveau andSchoenfeld (2017), andChung et al. (2017), who concluded that by increasing voluntary disclosure companies can Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1695 Revista BASEv.20,n.2, abril/junho 2023 attract more external financing, due to the reduction of information asymmetry and corresponding increased trust of investors.In this same line, according to Li (2017) investors perceive a lower risk of investing their capital due to the lower information asymmetry brought by voluntary disclosure.The evidence observed by Sethuraman (2019) and Allee and Deangelis (2015) also supports the hypothesis that the reduction of information asymmetry due to voluntary disclosure tends to increase the confidence of investors.
As shown in Table 5, the variable SIZE coefficient is positive and statistic significant at 10%.
Indicating that the firm size has a positive effect on equity financing.This supports the results reported by Haddad et al. (2020) and Consoni and Colauto (2016), who found that the larger the size of a firm, the greater the amount of equity financing tends to be.
The coefficient of the variable ROA was negative and statistic significant at 10%, indicating that the Return Over Assets has a negative influence on Equity Financing, meaning that greater the profitability of the firms lower is the amount of financing obtained by issuing shares.The result runs contrary to the evidence reported by Félix Júnior, Oliveira, Miranda, Lagiola and Galvão (2018) and Haniffa and Cooke (2005), who found that more profitable firms tend to have higher levels of equity financing.
Finally, the variables LEV, SLIQ and CLIQ did not present statistical significance.

Conclusion
The goal of this study was to investigate whether voluntary disclosure increases the amount of equity financing of firms (H1).To test this research hypothesis, we estimated an econometric model with GMM method using a sample of 1,953 firm-year observations od nonfinancial firms listed on B3 Exchange from 2010 to 2017.Due to the inclusion of the lag of the dependent variable as a control variable in the GMM estimation, the sample size went down to 1,953 firm-year observations (2010 was dismissed).
The results found indicate that a higher level of voluntary disclosure implicates in more equity financing, on average.Confirming our research hypothesis (H1).This result indicates the importance of raising the level of voluntary disclosure to stakeholders, because this reduces the information asymmetry between managers and investors, raising their confidence and reducing their risk perception, thus increasing the amount of equity financing.
Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1696 Revista BASEv.20, n.2, abril/junho 2023 Overall, the results of this study are relevant to the literature by providing empirical evidence about the positive influence of voluntary disclosure on obtaining funding by issuing shares of nonfinancial firms listed on the B3.Among the practical contributions for companies and investors is that voluntary disclosure is a tool able to increase the amount of equity financing, by reducing information asymmetry and raising the confidence of investors, which tends to boost the economic and financial performance of companies.
There are elements related to a certain subjectivity in the process of measuring the proxy of voluntary disclosure, since the selection criteria, although scientifically established by previous research, this process is done through the researcher's judgment.Thus, it is suggested that future research uses automated mechanisms to measure this proxy, thus reducing the subjectivity of measurement.Since this study only used issuance of shares as a variable of outside financing, other studies could be conducted using different measures of the capital structure of companies, such as the amount of debt financing, to compare the results against those of this study.

(
obtained through third-party resources), because equity financing variable used in this study can reach all investors and other stakeholders, something that financing from third-party resources would do in smaller Voluntary Disclosure and Equity Financing in Brazil ____________________________________________________________________________________ 1693 Revista BASEv.20,n.2, abril/junho 2023 proportions.

Voluntary Disclosure and Equity Financing in Brazil
. Voluntary disclosure can enable a firm to attract

Table 1 . Voluntary Disclosure and Equity Financing in Brazil
.

Table 4
presents the Pearson correlation between the variables.All correlations are statistic significant but the correlation between LV and CLIQ.The correlation between VDISC and EF is positive and statistic significant at 1% level, indicating a positive relation between these variables, that is a positive relation between the level of voluntary disclose and the equity financing.There is no indication of collinearity problem since there is no high correlation (<-0.7 or >0.7) between the control variables.

Table 5
presents the estimation results of the econometric model presented at Equation (

Table 5 .
Results From Gmm Estimation