Voluntary disclosure of operating income

Jilnaught Wong and Norman Wong

Accounting and Finance, 2010, vol. 50, issue 1, 221-239

Abstract: This study investigates whether New Zealand firms’ voluntary disclosure of operating income, which is also known as earnings before interest and tax, in the income statement is related to the investment opportunity set. New Zealand provides an ideal setting to examine this because New Zealand generally accepted accounting principles do not require the disclosure of operating income as an intermediate income number in arriving at net income (earnings) in the income statement. We hypothesize and find evidence that firms with high assets‐in‐place and high leverage are more likely to voluntarily disclose operating income/earnings before interest and tax. However, the assets‐in‐place finding is sensitive to alternative measures of the investment opportunity set.

Date: 2010
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https://doi.org/10.1111/j.1467-629X.2009.00319.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:50:y:2010:i:1:p:221-239

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