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Author: Konrad Lang Publisher: ISBN: Category : Languages : en Pages : 24
Book Description
Empiricists document that firms more often voluntarily disclose bad news than good news and link this pessimism to managers' increased incentives not to fall short of earnings expectations. This paper analyzes the voluntary disclosure of a manager's private information by explicitly considering her incentives to meet or beat an analyst's earnings forecast. The model predicts that managers who face strong incentives to meet or beat these forecasts more frequently disclose bad news than good news in order to guide analysts' expectations about future earnings downward. This pessimism is higher in markets with less informed managers and may hold even if the manager has strong incentives for high stock prices and meet-or-beat incentives are comparably low.
Author: Konrad Lang Publisher: ISBN: Category : Languages : en Pages : 24
Book Description
Empiricists document that firms more often voluntarily disclose bad news than good news and link this pessimism to managers' increased incentives not to fall short of earnings expectations. This paper analyzes the voluntary disclosure of a manager's private information by explicitly considering her incentives to meet or beat an analyst's earnings forecast. The model predicts that managers who face strong incentives to meet or beat these forecasts more frequently disclose bad news than good news in order to guide analysts' expectations about future earnings downward. This pessimism is higher in markets with less informed managers and may hold even if the manager has strong incentives for high stock prices and meet-or-beat incentives are comparably low.
Author: Faten Lakhal Publisher: ISBN: Category : Languages : en Pages : 30
Book Description
The primary objective of this paper is to examine the relationships between voluntary earning disclosures made by French-listed firms and financial analysts' behavior. This paper focuses on voluntary earnings disclosures' contribution in explaining analysts' coverage and their earnings forecasts properties including forecast error and dispersion. We examine voluntary disclosures and analyst coverage as two decisions that could be endogenously determined. Our sample includes 154 French-listed firms from 1998 to 2001. Results using simultaneous equation model show that the disclosure decision influences and is not influenced by financial analysts' coverage, suggesting analysts choose to follow firms with high voluntary disclosure practices. Additional findings show that voluntary earnings disclosures are likely to improve analysts' forecasts accuracy and to reduce the dispersion among financial analysts' forecasts suggesting these disclosures reduce market uncertainty about forecasted earnings. These findings imply that corporate disclosure policy is helpful to financial analysts.
Author: Dan S. Dhaliwal Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We examine the relationship between disclosure of nonfinancial information and analyst forecast accuracy using firm-level data from 31 countries. We use the issuance of standalone corporate social responsibility (CSR) reports to proxy for disclosure of nonfinancial information. We find that the issuance of standalone CSR reports is associated with lower analyst forecast error. This relationship is stronger in countries that are more stakeholder-oriented -- i.e., in countries where CSR performance is more likely to affect firm financial performance. The relationship is also stronger for firms and countries with more opaque financial disclosure, suggesting that issuance of standalone CSR reports plays a role complementary to financial disclosure. These results hold after we control for various factors related to firm financial transparency and other potentially confounding institutional factors. Collectively, our findings have important implications for academics and practitioners in understanding the function of CSR disclosure in financial markets.
Author: Guanming He Publisher: ISBN: Category : Languages : en Pages :
Book Description
We investigate whether voluntary disclosures of product and business expansion plans affect analyst coverage and forecasts. We find that the level of analyst coverage is positively associated with the incidence of disclosures of product and business expansion plans. We also find that product and business expansion disclosures increase the informativeness of analyst earnings forecasts. We find no evidence that product and business expansion disclosures increase analyst forecast errors. Overall, our study contributes to understanding the role of product and business expansion disclosures in analyst forecast behaviour.
Author: Ole-Kristian Hope Publisher: ISBN: Category : Languages : en Pages : 47
Book Description
This is one of the first large-scale studies to examine the voluntary disclosure practices of foreign firms cross-listed in the United States. We proxy for voluntary disclosure using three attributes of firms' management earnings guidance: (1) the likelihood of issuance; (2) the frequency of earnings guidance; and (3) a guidance quality measure. After first establishing that market participants view these firms' disclosures as credible and economically important (i.e., the disclosures are negatively related to analyst forecast errors and the implied cost of equity capital), we compare cross-listed firms' disclosure practices with comparable U.S. firms and explore variations in disclosure practices among cross-listed firms. We find that cross-listed firms issue less frequent and lower quality management earnings guidance than comparable U.S. firms. We further show that the gap between U.S. and cross-listed firms widened after passage of Regulation FD, a regulation which induced greater public disclosure of firm-specific information. Focusing on the sample of cross-listing firms, we show that firms from common-law countries disclose more than firms from code-law countries. Finally, our results indicate that cross-listed firms that do not list on an organized U.S. exchange provide more frequent and higher quality disclosure than those that do list on organized exchanges.
Author: Carol Liu Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
This study investigates whether effective audit committees influence the association between management earnings forecasts and the properties of analysts" forecasts. We posit that this influence on the part of an audit committee would likely result from increased responsibility for monitoring voluntary disclosure. Using the four attributes that the Blue Ribbon Committee (1999) and prior research suggest as being indicative of audit committee effectiveness, we find that analysts" forecasts exhibit higher accuracy and lower dispersion with the issuance of management forecasts for those firms employing audit committees that are composed exclusively of independent directors, include an accounting expert, and act with due diligence. We also find that effective audit committees strengthen the association between management and analyst forecast accuracy. Our evidence, therefore, supports the notion that effective corporate governance influences the reliability of voluntary disclosure, and thereby benefits the users of financial information.
Author: Konrad Lang
Author: Konrad Lang
Author: Gillian Hian Heng Yeo
Author: Faten Lakhal
Author: Phyllis S. McGrath
Author: Dan S. Dhaliwal
Author: Guanming He
Author: Gregory Smith Miller
Author: Ole-Kristian Hope
Author: Nan Xu
Author: Carol Liu