Financial Performance, Digital Disclosure, and Firm Value: Do Purely Local Companies Differ From Cross-Listed Firms? Evidence from East African Countries 2012–2022

Abstract

In the new global economy, marked by technological uncertainty, financial performance and digital activities have emerged as major concerns for shareholders and stakeholders. The study looks at the role of digital disclosure in the relationship between financial performance and firm value and whether purely local companies differ from cross-listed firms. To test the current study hypothesis, we apply linear regressions with panel data using the NSE, RSE, DSE, and USE data bases from a sample of 39 Kenya, 3 Rwanda, 17 Tanzania, and 14 Uganda firms respectively, over the period 2012–2022. The sample consisted of 51 purely local firms and 8 cross-listed firms. The study's findings indicate that there was a significant main effect between financial performance and firm value and also a significant main effect of digital disclosure on firm value. There was a significant interaction between going digital and financial performance and firm value. Lastly, there was a statistically significant difference between cross listed and purely local firm. Digital disclosure at lower levels enhances the relationship between financial performance and firm value. Generally, firms that are cross-listed provide more digital disclosure information compared to purely local listed companies. Firms practice conservative disclosure of digital activities since unsuccessful research activities may influence future performance and investors' confidence.