Voluntary Disclosures and Information Production By Analysts PDF Download

Author: Nisan Langberg
Publisher:
ISBN:
Category :
Languages : en
Pages : 42

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Book Description
We analyze the voluntary disclosure decision of a manager when analysts scrutinize the quality of disclosure. We derive an equilibrium in which managers voluntarily disclose unfavorable information only if sufficiently precise, but disclose favorable news with lower levels of accuracy. We show that analysts cover good news disclosures with higher scrutiny. To the extent analysts rely on mandatory financial reports to interpret voluntary disclosures, we show that more precise financial reports may lead to more precise but less frequent voluntary disclosures. Moreover, a slant toward conservatism in financial reports can lead to less precise yet more frequent voluntary disclosures.

Author: Faten Lakhal
Publisher:
ISBN:
Category :
Languages : en
Pages : 30

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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: Konrad Lang
Publisher:
ISBN:
Category :
Languages : en
Pages : 24

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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: Patrick Roy
Publisher: diplom.de
ISBN: 3832448292
Category : Business & Economics
Languages : en
Pages : 141

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Book Description
Abstract: In a first step, this ERP derives the theoretical necessity to provide voluntary strategic and non-financial Information. It is argued that companies are an integral part of a common environment and society, acting in a framework of interdependent relationships. A company is more and more seen as a community of interests of different groups, and it can only act in an optimal way if the demands of all groups are taken into account and its behaviour is adjusted accordingly. In this context, interest groups' demands for company Information depend an the possibilities of improvements in decision making or monitoring that arise with its use, which in turn is mainly determined by the potential of Information to reduce uncertainty in the areas of interest. For external decision-makers, uncertainty often arises from sources about which conservative company statements provide little insight. Due to the traditional, finance-oriented concept of disclosure, this is particularly true for strategic and non-financial aspects. Related additional Information that is voluntarily provided can considerably reduce uncertainty, even more so as part of audited statements. Conventional financial reporting and existing disclosure requirements will generally not nearly satisfy those information needs of user groups. Any economic action, though, should only be taken if related benefits are exceeding related costs. This priority of economicalness also holds for companies' production, processing and disclosure of Information. Therefore, it is necessary to consider as detailed as possible potential opportunities and disadvantages for voluntarily disclosing company Information both an and outside capital markets. This is done in a second major part of the present work. First, voluntary disclosure can potentially affect share prices and thereby the market value of the firm, markets not being strong-form efficient. So, by giving company Information, a higher market value can directly be induced, thereby potentially lowering the cost of capital which, for example, improves the company's competitive position in the battle for cheap additional financing. [...]

Author: Sivan Frenkel
Publisher:
ISBN:
Category :
Languages : en
Pages : 41

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Book Description
We analyze a model in which information may be voluntarily disclosed by a firm and/or by a third party, e.g., financial analysts. Due to its strategic nature, corporate voluntary disclosure is qualitatively different from third-party disclosure. Greater analyst coverage crowds out (crowds in) corporate voluntary disclosure when analysts mostly discover information that is available (unavailable) to the firm. Nevertheless, greater analyst coverage always improves the overall quality of public information. We base this claim on two market quality measures: price efficiency, which is statistical in nature, and liquidity, which is derived in a trading stage that follows the disclosure stage.

Author: Zhaolin Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
This paper establishes linkages among the firm's discretionary disclosures and other firm-specific operational activities, such as managerial compensation, demand forecast, marketing efforts, and production planning. We show that the option of discretionary disclosures and managerial self-interests in the firm's share price do not necessarily distort the operational activities such as marketing and production, but do induce less investments in forecast precision than a benchmark does. The firm's cash flows (excluding cost of disclosures) are actually the highest when the manager's compensation package is not directly linked to the share price or when the disclosure is mandatory. Our analysis also adds into the debate about mandatory and voluntary disclosures by showing that mandatory disclosures may produce better quality public information but on the expenses of corporate resources.

Author: Jennifer Francis
Publisher: Now Publishers Inc
ISBN: 1601981147
Category : Business & Economics
Languages : en
Pages : 97

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Book Description
This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Author: Anne Waceke Gichuru
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Author: Young Jun Cho
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Book Description
We examine the relation between information externalities along the supply chain and voluntary disclosure. Information transfers from a major customer's earnings announcement (EA) can substitute for its supplier's disclosure. Conversely, if the customer's EA increases uncertainties regarding the supplier's future prospects, it can increase the demand for disclosure. After controlling for information incorporated in supplier returns, we find that the supplier is more likely to issue earnings guidance after the customer's EA when the EA news deviates more from the market's expectation. The positive effect of the customer's news on earnings guidance is weaker when common investors, supply-chain analysts, or a common industry allow investors to better understand the value implications of the news, while the effect increases with the importance of the customer to the supplier. The effect is also stronger when the EA news is negative than positive. Collectively, the results suggest that supply-chain relationships influence voluntary disclosure.

Author: Hubert de La Bruslerie
Publisher:
ISBN:
Category :
Languages : en
Pages : 48

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Book Description
The purpose of this study is to determine if the process of filtering out the financial information voluntary disclosed by firms is modified by the introduction of new mandatory information requirement. Voluntary information disclosed by French firms during the 2003-2008 period is compiled. This original dataset includes several years both before and after the introduction of the IFRS in the European Union in 2005. We use regression analysis to identify the determinants and consequences of the communications policies of listed firms. Particularly, we show that highly communicative firms may reduce the information asymmetry as measured by the dispersion of analysts' earnings forecasts when they voluntarily disclose information. The level of voluntary disclosure and earnings forecasts by analysts are endogenous and exhibit a complex two-way relationship. Voluntary communication policies did not change with the introduction of the IFRS.