Hierarchical Complexity and Corporate Opaqueness

Abstract

This thesis examines the impact of hierarchical complexity on corporate opaqueness and how this relationship varies under the moderating effect of corporate diversification, quality of the home country institutional environment and the host country institutional environment. I hypothesize that increases in firms’ hierarchical complexity are related to greater corporate opaqueness between the firm and outside investors on the capital market. Using a sample of US firms spanning 5 years from 2012 to 2016, I find a statistically and economically significant, positive relationship between hierarchical complexity and corporate opaqueness. The results of the thesis further imply that the impact of hierarchical complexity on opaqueness is alleviated when there is related corporate diversification and an increasing quality of the host country institutional environment.