Download or read book The Future of Voluntary Disclosure written by Noam Noked and published by . This book was released on 2018 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article calls for the IRS to adopt permanent voluntary disclosure procedures that incorporate specific features of the latest offshore voluntary disclosure program and correct some of its flaws. If the IRS does not provide new voluntary disclosure procedures for willful noncompliance, taxpayers will face uncertain penalties under the so-called quiet disclosures and the traditional voluntary disclosure practice outlined in the Internal Revenue Manual. That uncertainty - and the potential for inconsistent treatment of similarly situated taxpayers - would increase the costs of becoming compliant and ultimately discourage taxpayers from making voluntary disclosures.

Download or read book A New Era of Voluntary Disclosure Empirical Evidence on How Employee Postings on Social Media Relate to Future Corporate Disclosures written by Jeffrey Hales and published by . This book was released on 2018 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the advent of social media, individual public opinions about firms can be more easily accessed and aggregated, and recent research suggests that various platforms, such as Twitter, Seeking Alpha, and Estimize, provide information relevant in predicting future corporate disclosures. Rather than focusing on the general public's opinion, we examine a public platform designed to convey insider information - Glassdoor.com, where employees voluntarily share their opinions on a number of issues, including the company's near-term business outlook. Using a sample of approximately 150,000 employee reviews, we extract both employees' explicit assessments of outlook and a measure of their latent outlook derived from factor analysis. We then examine whether the opinions employees share on social media relate to future corporate disclosures. In particular, we find evidence that employee opinions are useful in predicting growth in key income statement information, transitory reporting items (e.g., restructuring charges), earnings surprises, and management forecast news. While voluntary disclosures about firm performance have traditionally come from executives, our evidence suggests that rank-and-file employees are chipping away at upper-level management's exclusive control over that channel.

Download or read book Voluntary Disclosure and Corporate Innovation written by Ziyao San and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This research consists of two parts. In the first part, I examine whether a firm whose chief executive officer (CEO) is more future-oriented (as measured by commitment to voluntary disclosure practices, i.e., issuing more frequent and more disaggregated earnings forecasts) is likely to be more successful in corporate innovation investment. Using a global sample of 26,364 firms from 27 countries and a single-country sample of 8,980 firms (domiciled in the US), I find that firms with more future-oriented CEO are granted more patents and receive more citations per patent. The results of additional cross-sectional analyses indicate that the relationship between commitments to voluntary disclosure and corporate innovation varies with various CEO-, firm-, and country-level factors. In the second part of this research, I investigate the role of CEOs personality traits in corporate innovation and in the association between commitment to voluntary disclosure and corporate innovation. I find that firms with more extraverted CEOs tend to be more successful in their innovation investment in the future and that the signaling role of commitment to voluntary disclosure in corporate innovation success is more pronounced in firms with more extraverted CEOs. My findings also indicate that voluntary disclosure by more extraverted CEOs attracts more investor attention. Collectively, the results of this research support the conjecture that future-oriented CEOs are likely to commit to voluntary disclosure practices to signal their ability to manage uncertainties associated with innovation investment and thereby achieve innovation success. Additionally, such signaling tends to be driven by more extraverted CEOs. This research should be important for the investors and other stakeholders, as it shows how the likelihood of firms future innovation success can be inferred from CEOs observable earnings forecasting behavior. The findings may also be of interest to firms, as they highlight the importance of considering candidates level of extraversion when hiring a CEO. Finally, the findings of this research should be helpful to policymakers who develop initiatives to enhance firms voluntary financial disclosure, because this research highlights how the effectiveness of management earnings forecasts in signaling corporate innovation success varies with country-level institutional characteristics.

Download or read book Voluntary Disclosure and Increases in Earnings written by Gregory Smith Miller and published by . This book was released on 1998 with total page 198 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Value Relevance of Voluntary Disclosure in the Annual Report written by Jesper Banghøj and published by . This book was released on 2006 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines if the level of voluntary disclosure affects the association between current returns and future earnings. Economic theory suggests that firms might find it advantageous to provide additional pieces of information (i.e., voluntary disclosure) to investors and analysts (Verrecchia 1983). Our results indicate that more voluntary disclosure does not improve the association between current returns and future earnings; i.e. current returns do not reflect more future earnings news. This finding raises the question whether voluntary information in the annual report contains value relevant information about future earnings or if investors are simply not capable of incorporating voluntary information in the firm value estimates. Key words: Disclosure, future earnings, informativeness.

Download or read book Limits to Voluntary Disclosure in Efficient Markets written by Bharat Sarath and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In competitive markets, prices offered by investors play a dual role: they must induce the firm to make truthful disclosures about its expected cash flows and they must also be efficient, i.e., equal the expected future cash flows to the buyer conditional on the disclosed information. We show that these requirements may exert opposing influences resulting in equilibrium disclosures being partial; that is, they might cause firms to reveal some, but not all of the valuation relevant information possessed by the firm. We then characterize the maximal level of information that can be elicited through efficient prices. We apply our analysis to the study of voluntary disclosures in the context of equity offerings, leases and sale of tax-loss carry-forwards and compare these to the level of currently mandated disclosures under GAAP.

Download or read book The Genesis of Voluntary Disclosure written by Kristian D. Allee and published by . This book was released on 2019 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate a firm's decision to initiate earnings guidance during its first year as a public company following its initial public offering (IPO), which we label “early guidance.” Using a sample of firms with IPOs between 2001 and 2010, we find that almost 60% of our IPO firms provide early guidance and that only one third of the firms that do not provide guidance during the first year subsequently decide to guide. Consistent with the importance of liquidity incentives following the IPO, we find that firms are significantly more likely to provide early guidance when their IPOs are backed by venture capital or private equity investors. Our results indicate that firms with higher IPO information quality are more likely to provide early earnings guidance. We also find that early guidance has significant implications for future disclosure choices. Firms that guide soon after the IPO are significantly more likely to guide again and to provide regular future guidance (i.e., they establish a regular guidance policy). Finally, we find evidence suggesting that the credibility of initial guidance is lower than that of subsequent guidance, and subsequent guidance credibility relates to both the length of firms' guidance history and the accuracy of their initial guidance disclosures.

Download or read book Voluntary Disclosure in R D Intensive Industries written by Denise A. Jones and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Disclosures about R&D activities could potentially help market participants understand the future prospects of R&D intensive firms, but at the same time could be costly to make if the disclosure is related to proprietary information. I examine R&D-related disclosures made by R&D intensive firms in their annual report, as well as throughout the year to financial analysts. I find that the level of R&D-related voluntary disclosure is higher when proprietary costs are lower and when the book to market ratio is lower, perhaps because the basic financial statements are less informative about market value. In addition, after controlling for the level of general disclosure and forward looking disclosure, I find a negative relation between disclosures about development stage R&D and both analysts' one-year-ahead sales forecast error and dispersion. This is consistent with disclosures about development stage R&D reducing analyst uncertainty about one-year-ahead sales. I find mixed evidence about earnings forecasts. A higher level of disclosure about both R&D projects in progress and development stage R&D is associated with less error in analysts' one-year-ahead earnings forecasts. However, I find no evidence of a relation between R&D-related disclosure and the dispersion in one-year-ahead earnings forecasts.

Download or read book Voluntary Disclosure of Sensitivity written by Bjorn Jorgensen and published by . This book was released on 2009 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Starting in 1997, the U.S. Securities and Exchange Commission required that some firms disclose information about risks. One format for risk disclosures let firms disclose correlations by allowing firms to report the sensitivity to market risk factors of cash flows related only to financial instruments and derivatives. Prior theoretical accounting research analyzes the benchmark of voluntary disclosures to establish the effects of mandating disclosures of various types, but not disclosures of sensitivities. We propose the first theoretical model that analyzes the consequences of mandating firms to disclose their sensitivity. This model extends previous research on managers' voluntary disclosures of variances of future cash flows and measurement error of disclosures. Specifically, we derive equilibrium prices and stock returns endogenously in a setting where truthful disclosure of the sensitivity is voluntary, that is, the manager may elect to not disclose. We show that in the absence of disclosures about the sensitivities, investors require an additional risk premium. We further show that a manager's decision to disclose or withhold the sensitivity may be affected by other firms' disclosures of sensitivity even when sensitivities are uncorrelated. Finally, we show how voluntary sensitivity disclosures affect firms' cost of capital even in the limiting case with infinitely many firms.

Download or read book An Examination of the Impact of Voluntary Disclosure on the Post earnings Announcement Drift written by Changjiang Wang and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the impact of voluntary disclosure in the form of management earnings guidance on post-earnings announcement drift (PEAD). Prior research contends that investors' delayed response to the information contained in earnings contributes to PEAD. This delayed response occurs because either investors fail to understand the full implications of current earnings for future earnings or transactions costs prevent a complete and immediate response to earnings news. To the extent that management earnings guidance (MEG) overcomes these shortcomings, I examine three research questions. First, does MEG mitigate PEAD? Second, what is causal channel through which MEG mitigates PEAD? Third, is the impact of MEG on PEAD sensitive to the quality of MEG? Using management earnings guidance data from First Call for the period between 1996 and 2006, I show that MEG mitigates PEAD. I also find that MEG not only improves the extent to which investors incorporate prior earnings information into their earnings expectations but also provides information about future earnings which is uncorrelated with prior earnings information. Further, I find the mitigation effect of guidance on PEAD increases with guidance quality in terms of precision, accuracy, and usefulness. Overall, my study provides evidence on the effectiveness of voluntary disclosure and the channel through which it can alleviate the accounting anomaly of PEAD.

Download or read book Voluntary Disclosure and Earnings Asymmetric Timeliness written by Michael Dambra and published by . This book was released on 2019 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managers' voluntary disclosure of forward-looking earnings information results in stock prices reflecting that information prior to the fiscal period when the corresponding earnings are announced. We predict that forward-looking management earnings forecasts (MFs) will lead to a weaker relation between contemporaneous returns and earnings, resulting in a predictable attenuation in earnings asymmetric timeliness measured using the Basu (1997) model (and related models). The intuition is that forward-looking disclosures such as MFs decouple the period in which prices reflect the earnings news from the future period in which the actual earnings related to the forecast will be recognized and announced. We find that earnings' asymmetric timeliness is insignificant for firms issuing MFs of future-year earnings. Additional analysis rules out the alternative explanation that these findings are due to differences in the pattern of earnings recognition or total information flow in periods with forward-looking disclosures. An implication of our findings is that, in the presence of forward-looking managerial disclosures such as MFs, research on conservatism should exercise caution when attributing variation in asymmetric timeliness exclusively to the hypothesized determinants of conservatism.

Download or read book Voluntary Disclosure as a Response to Low Accounting Quality written by Sarah Catherine Tasker and published by . This book was released on 1997 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Voluntary Environmental Disclosure Quality and Firm Value written by Marlene Plumlee and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relationship between the quality of a firm's voluntary environmental disclosures and firm value by exploring the relationship between the components of firm value (expected future cash flows and cost of equity) and voluntary environmental disclosure quality. We measure voluntary environmental disclosure quality using a disclosure index consistent with the Global Reporting Initiative disclosure framework for a sample of US firms across five industries. In addition to overall disclosure quality, we consider the type (i.e., hard/soft) and the nature (i.e., positive/neutral/negative) of the disclosure in our analysis. We also include controls for both positive and negative environmental performance. Based on this analysis, we document (1) a positive association between some aspects of voluntary environmental disclosure quality and future expected cash flows, and (2) both a negative and positive association between some aspects of voluntary environmental disclosure quality and a firm's cost of equity capital. Our findings are consistent with increased voluntary environmental disclosure quality being associated with firm value through both the expected cash flow and cost of equity capital components. The results also highlight the benefit of parsing broader measures (e.g. voluntary disclosure quality) when examining complex relationships.

Download or read book Mandatory and Voluntary Disclosures written by Davide Cianciaruso and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms sometimes obtain soft private information about growth prospects along with hard information about current or past performance. In this environment, we find that optimizing disclosures over multiple periods yields nonlinear stock price reactions following both voluntary and mandatory disclosures. Further, we derive several predictions about distinct short-run and long-run effects of disclosures and nondisclosures on security prices. Under specified conditions, when the volatility of the firm's earnings increases, the average contemporaneous and prospective post-mandatory-disclosure market premia (for voluntary disclosures over nondisclosures) rise, while farther-in-future market discounts (for such voluntary disclosures) also become larger. Our analysis moreover predicts that both the disclosure probability and the information content of nondisclosures can increase in the persistence of earnings.

Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book The Structure of Voluntary Disclosure Narratives written by Kristian D. Allee and published by . This book was released on 2015 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine tone dispersion, or the degree to which tone words are spread evenly within a narrative, to evaluate whether narrative structure provides insight into managers' voluntary disclosures and users' responses to those disclosures. We find that positive and negative tone dispersion are associated with current aggregate and disaggregated performance and future performance, managers' financial reporting decisions and managers' incentives and actions to manage perceptions. Furthermore, we find that tone dispersion is associated with analysts' and investors' responses to conference call narratives. Our results suggest that tone dispersion both reflects and affects the information that managers convey through their narratives.

Download or read book Accounting Disclosure and Real Effects written by Chandra Kanodia and published by Now Publishers Inc. This book was released on 2007 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: Kanodia presents a new approach to the study of accounting measurement that argues that how firms' economic transactions, earnings, and capital flows are measured and reported to the capital markets has substantial effects on the firms' real decisions and on the allocation of resources.