Voluntary Disclosure of Strategic Operating Information and the Accuracy of Analysts' Earnings Forecasts

Sidney Leung
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Sidney Leung: Department of Accountancy, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong

Chapter 5 in Advances in Quantitative Analysis of Finance and Accounting:New Series, 2004, pp 73-88 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis paper examines whether earnings predictability would affects managerial decisions in the voluntary disclosure of non-financial information about business strategies and future plans. Specifically, the study investigates whether the accuracy of analysts' earnings forecasts is associated with the extent of managers' voluntary disclosure of strategic operating information (SOI). The empirical results show that managers of firms with greater analysts' forecast errors are more likely to voluntarily disclose strategic operating information. It is also found that enhanced SOIs are associated with improvement in forecast accuracy. The findings support the conjecture that firms whose earnings are difficult to accurately predict are more inclined to use SOI for investor communication.

Keywords: Discretionary Accruals; Futures Price Volatility; Bid-Ask Spread Components; CEO Compensation; Executive Cash Compensation; Convertible Debts; Environmental Liabilities (search for similar items in EconPapers)
Date: 2004
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