Are voluntary disclosures that disavow the reliability of mandated fair value information informative or opportunistic?

Walter G. Blacconiere, James R. Frederickson, Marilyn F. Johnson and Melissa F. Lewis

Journal of Accounting and Economics, 2011, vol. 52, issue 2, 235-251

Abstract: One consequence of the shift to fair value measurement is the emergence of voluntary disclosures in audited financial statements that question the reliability of mandated fair value information. We refer to these disclosures as reliability disavowals. We examine stock option volatility estimates disclosed under SFAS 123 and test whether disavowals are informative (opportunistic) by examining whether ex ante firm characteristics, forecast bias, and prediction difficulty are consistent with informative (opportunistic) disclosure. Our results support the hypothesis that disavowals inform users about the reliability of volatility estimates, but there is also limited evidence consistent with managers using disavowals opportunistically.

Keywords: Fair value; Disclosure; Informative; Opportunistic; Reliability; Stock options (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:52:y:2011:i:2:p:235-251

DOI: 10.1016/j.jacceco.2011.09.002

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