Download or read book Managerial and Investor Responses to Disclosure Regulation written by Brian J. Bushee and published by . This book was released on 2011 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effect of regulation that mandates open access to information on managers' disclosure choices and investors' reactions to disclosures. The recently passed Regulation FD (Reg FD) requires firms to make material disclosures broadly available. Using a sample of firms that previously restricted access to conference calls and a sample of firms that voluntarily allowed unlimited access to their calls in the pre-Reg FD period, we examine the effect of the new rule on managers' decisions regarding the timing, use, and information content of calls, as well as the effect on investors' trading behavior during the call. Our results indicate that Reg FD had a significant negative impact on managers' decisions to continue hosting conference calls and on their decisions regarding the optimal time to hold the call. However, contrary to the concerns of many critics, the magnitudes of these changes are not large. We do not find evidence that Reg FD decreased the amount of information disclosed during the call period, contrary to the concerns of Reg FD opponents. Finally, we find evidence that the new rule increased price volatility for firms that previously restricted access to their calls (relative to firms that previously held open calls) and that the amount of individual investor trading increased following the rule change. Overall, our results suggest that Reg FD impacted trading during the conference call window for firms most affected by the new regulation.
Download or read book Investor Reaction to Disclosure of Past Performance and Future Plans written by Scott Adams Emett and published by . This book was released on 2017 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms dedicate large portions of financial disclosures to updating and discussing their strategy and plans for the future, and investors often evaluate those plans after learning how the firm performed in the current period. I examine how current-period performance shapes investors' beliefs about the appropriateness of managerial optimism which, in turn, affects their evaluation of firms that focus on either challenges or opportunities in future-oriented disclosures. I conduct three experiments that test my process theory. I hypothesize and find that a firm's current-period performance shapes investors' beliefs about whether managers can best achieve success by being more or less optimistic about the future. When a firm is performing poorly, investors believe that managers can best achieve success by being more optimistic and less realistic about the future, and therefore invest more if the firm focuses on opportunities rather than challenges in future-oriented disclosures. When a firm is performing well, on the other hand, investors believe that managers can best achieve success by being more realistic and less optimistic about the future, and therefore invest more if the firm focuses on challenges rather than opportunities. These results challenge the notion that investors always react positively (negatively) to disclosures that focus on opportunities (challenges). Instead, these results suggest circumstances in which managers can benefit by focusing on challenges, in order to signal a more realistic and less optimistic outlook about the future.
Download or read book Making Good Disclosure written by Robert Dean Pope and published by Government Finance Officers. This book was released on 2001-11-01 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Management Disclosure Strategies and Investor Reaction to Preemptive Disclosures by Firms Facing an Earnings Surprise written by Carolyn J. Gilchrist and published by . This book was released on 1997 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investor Relations for the Emerging Company written by Ralph A. Rieves and published by John Wiley & Sons. This book was released on 2002-02-21 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt: The definitive guide for CEOs, CFOs, and executives of newly public companies Learning to deal with investors, employees, media, regulators, and others once a company has gone public requires dedication and consistency. Investor Relations for the Emerging Company helps fledgling public company officers and directors prepare for the unique business task of convincing investors of their company's value. From describing the various organizations, institutions, mechanics and behaviors of capital markets to clarifying the requirements and best practices for reporting and disclosure, this book provides all the answers. CEOs, CFOs, and executives who must operate an effective investor relations program within the budget constraints of their newly listed company will use this book for years to come.
Download or read book The Effects of Regulation Fair Disclosure on Management Forecasts written by Carla Carnaghan and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine management forecasts to determine whether Regulation Fair Disclosure has improved the quality and quantity of public disclosures. Management forecasts are voluntary, provide earnings guidance and are highly sought by investors and analysts. We find that the information disclosed by managers has improved in terms of frequency, specificity and verifiable information provided. We also find that Regulation Fair Disclosure has reduced information asymmetry, and information leakage prior to the release of the MEF. We find no evidence of greater returns volatility. Our results suggest that generally Regulation Fair Disclosure has achieved one of its stated goals of providing a more level playing field to all investors.
Download or read book The Influence of Sensitivity Disclosures on Investor Judgments written by W. Brooke Elliott and published by . This book was released on 2008 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study presents the results of an experiment that examines how sensitivity disclosures influence investors' judgments of the reliability of financial statement items. A sensitivity disclosure uses quot;parametersquot; to describe the slope of change in a financial statement item value in response to change in an input that underlies the item. Since sensitivity can be depicted using any two points along the slope of change, managers can choose different parameters to communicate the same sensitivity. In our experiment, we manipulate the magnitude of the parameters (i.e., points along the slope of change) used in the sensitivity disclosure for the capitalized software development asset of a hypothetical firm. The results indicate that investors' reliability judgments decrease as the reported parameters increase. Mediation analysis provides evidence that the effect of parameters on investors' reliability judgments occurs through their impact on the size of the set of alternative financial statement item values investors perceive as a result of observing the sensitivity information. Additional evidence suggests that the effect of parameters reflects an unintentional reliance on the set of alternative values made available by the parameters, rather than a conscious response to a perceived management signal about reliability through parameter choice. This study has implications for disclosure requirements given the increasing acceptance of measurement attributes that require estimation (e.g., fair value), and improves our understanding of how disclosures influence investors' reliability judgments.
Download or read book Individual Investors Trading Responses to Accounting Disclosures written by Weiwei Wang and published by . This book was released on 2016 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: A large amount of prior research that aim at understanding how individual investors respond to accounting disclosures uses transaction sizes to differentiate between small/individual and large/institutional investors. Recent studies have found that certain institutions are heavily involved in small size transactions. The analysis of individual investor trading based on transaction sizes erroneously draws inferences related to the small size transactions of institutional investors instead of transactions of individual investors. I re-investigate several fundamental issues using a comprehensive dataset of individual investor trading on the NYSE. First, I find that for individual investors there is a high concentration of trading around the earnings announcements and that the concentration is significantly higher than what is seen for the overall market. This finding is inconsistent with Cready [Journal of Accounting Research, 1-27 (1988)] which interprets the increase of the mean transaction size during the announcement periods as evidence that large/institutional investors find earnings information relatively more valuable than small/individual investors. Second, I show that individual investors’ buying is more concentrated than their selling which supports Lee [Journal of Accounting and Economics, 15(2-3), 265-302 (1992)]’s finding that individual investors are particularly prone to buying during the earnings announcement periods. Third, I do not find a significant positive association between individual investor abnormal trading and the magnitude of seasonal random-walk forecast errors during the announcement periods. This is inconsistent with Bhattacharya [The Accounting Review, 76(2), 221-244, (2001)] which shows a positive association between abnormal small size transactions and the magnitude of random-walk forecast errors, and interprets the finding as evidence that individual investors rely on seasonal random-walk model to form earnings expectations. Fourth, my analysis finds no evidence of the negative relation between 10K complexity and individual investor trading activity documented in Miller [ The Accounting Review, 85(6), 2107-2143, (2010)].
Download or read book New Dimensions in Investor Relations written by Bruce W. Marcus and published by John Wiley & Sons. This book was released on 1997-11-03 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt: The acknowledged bible on investor relations Investor relations is an essential facet of any publicly tradedcompany, inevitably affecting its stock price, investments, andliquidity. Maximizing Your Investor Relations provides practicalguidance needed to master this complex undertaking and advocatepersuasively on your company's behalf to achieve greaterrecognition and value. Comprehensive and thoughtful, it focuses oncontrolling the day-to-day mechanics of investor relations to moreeffectively compete for capital.
Download or read book Investors Access to Corporate Management A Field Experiment about 1 on 1 calls written by and published by . This book was released on 2014 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a combination of field experimental, survey and archival empirical design, I study investors' access to corporate management in the context of public disclosure. Main findings include: (1) high willingness of senior management to engage in 1-on-1-calls with outsiders of the firm to discuss disclosure-related questions, (2) better corporate access when management's communication benefits are higher (3) quarterly quiet periods are not widely practiced and (4) lower information asymmetry and smaller return reactions pre-earnings release are associated with better management access. In my field experiment, 2,563 publicly-traded firms receive two identical emails seeking 1-on-1-calls to clarify MD&A related questions. Emails are sent from two distinct audiences, identifiable via web domain names, as (unknown) investors and consultants. Almost 58% of firms reply. A majority of responses come from senior management offering phone numbers and best times to call. Management access is lower for the consultant-audience which differs in perceived (proprietary) costs and (capital market) benefits from the investor-audience. To investors, management is more accessible when shareholder activism is high, short interest is low and MTB is low. Further, better management access is associated with reduced bid-ask spreads and lower informational content in stock prices shortly before earnings announcement. Together, this paper analyzes an important but academically uninvestigated source for gaining an enhanced understanding of public disclosure. It also serves as a starting point for a new line of work in disclosure-related accounting research that combines field experiments with archival empirical techniques to exploit randomized induced variation in real-world settings.
Download or read book The Informational Feedback Effect of Stock Prices on Corporate Disclosure written by Luo Zuo (Ph. D.) and published by . This book was released on 2013 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies whether managers use investor information they learn from the stock market when making forward-looking disclosures. Using annual management earnings forecasts from 1996 to 2010, I find that the association between forecast revisions and stock price changes over the revision periods is stronger when there is more informed trading. Further, the effect of investor information on the revision-return relation remains after controlling for various sources of managerial and public information, and is more pronounced when the information is more relevant to predicted earnings. In addition, more investor information contained in stock prices leads to a greater improvement in forecast accuracy but a weaker market reaction to the subsequent forecast announcement. My study highlights the two-way information flows between firms and capital markets and has implications for the real effects of financial markets.
Download or read book Research in Accounting Regulation written by Gary Previts and published by Elsevier. This book was released on 2006-01-27 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: The scope of service provided by professional accountants is influenced by legislation and case law as well as the dictates of a variety of government and private sector agencies; including State Boards of Accountancy, Academic Accreditation Bodies, the United States Securities and Exchange Commission, the Public Accounting Oversight Board, independent standard setting bodies such as the Federal Accounting Standards Advisory Board [US], the Financial Accounting Standards Board [US] and the International Accounting Standards Board. These entities and self-regulatory organizations such as U.S. State Societies of CPAs and the American Institute of Certified Public Accountants and equivalent and emerging national bodies that exist in most developed and developing countries, are among the emerging entities which attempt to coordinate the activities of professional accountants among sovereign nations. It is important for academics, students, practitioners, regulators and researchers to consider and study the role and relationship of such bodies with the practice and content of our discipline. Research in Accounting Regulation seeks high quality manuscripts which address accounting regulatory policy, broadly defined, including: 1. self regulatory activities 2. case law and litigation 3. legislation and government regulation 4. the economics of regulation of markets, and disclosure, including modeling 5. matters involving the structure of education, licensing, and accreditation The editors encourage submission of original empirical, behavioral or applied research manuscripts which consider strategic and policy implications for regulation, regulatory models and markets. It is intended for individual researchers, practitioners, regulators and students of accountancy who desire to increase their understanding of the regulation of accountancy.
Download or read book Investors Reactions to Management Disclosure Corrections written by Hun-Tong Tan and published by . This book was released on 2008 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Disclosure of material earnings-relevant information through corporate and news websites is increasingly popular, and so is the frequency of corrections to initial disclosures made. The formats adopted for such corrections differ in terms of the placement of the erroneous disclosure relative to the original disclosure, as well as the presence or absence of a forewarning of correction. We conduct an experiment to investigate whether erroneous earnings-related disclosures that are subsequently corrected by management continue to influence individual investors' judgments, and whether this effect is moderated by the format of the correction. Using M.B.A. students as proxies for investors, we conduct an experiment involving a context where a firm announces the negotiation outcome of a major contract, and then subsequently corrects this announcement. For a correction format where the erroneous disclosure is placed before the correction, participants' assessments of the likelihood of winning the contract and the firm's earnings potential/investment attractiveness continue to be influenced by the erroneous disclosure, despite the presence of a correction. For such correction formats where the erroneous disclosure is placed before the correction, presence of a warning of a correction before they read the erroneous disclosure does not mitigate the effect. Our experimental results provide some support that a correction format where the correction is placed prior to the erroneous disclosure reduces the influence of the erroneous disclosure.
Download or read book The Impact of Regulation Fair Disclosure on Investors Prior Information Quality Evidence from an Analysis of Changes in Trading Volume and Stock Price Reactions to Earnings Announcements written by Anwer S. Ahmed and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that Regulation Fair Disclosure has reduced differences in information quality between investors prior to quarterly earnings announcements consistent with the intent of the regulation. This reduction is driven by small firms and high technology firms, rather than the large firms targeted by the SEC, which suggests that selective disclosure among large firms may have been much more limited than what was presumed by proponents of FD. In addition, we document that FD has decreased the average information quality of investors in small and high technology firms in the period prior to an earnings announcement while having no lasting effect on other firms. Taken together these two results suggest that, for small and high technology firms, FD succeeded in eliminating selective disclosure but also lowered the average quality of information available about these firms.
Download or read book Understanding Accounting Academic Research written by Stephen R. Moehrle and published by Emerald Group Publishing. This book was released on 2013-06-25 with total page 298 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting scandals such as Enron and WorldCom ushered in several regulatory overhauls including Sarbanes-Oxley. This monograph summarizes and synthesize a decade of academic research to develop an evolving dominant explanation around these myriad changes.
Download or read book Do Features that Associate Managers with a Message Magnify Investors Reactions to Narrative Disclosures written by H. Scott Asay and published by . This book was released on 2018 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test whether investors react more strongly to narrative disclosures when the CEO's presence or association with the message is more salient in the disclosure, holding all other information constant. In our first experiment, we manipulate whether a CEO uses more personal pronouns (e.g., “I” and “our” rather than “the company” and “its”) in an assertion about whether the firm is “likely” or “unlikely” to win a lawsuit. We find investors' beliefs about the outcome of the lawsuit align more closely with the CEO's assertion when the disclosure contains more personal pronouns. Experiments 2 and 3 manipulate the extent of the CEO's association with the message and whether the disclosure contains good or bad news. In the second experiment, we manipulate whether a disclosure uses more personal pronouns. In the third experiment, we manipulate whether a disclosure does or does not contain a photo of the CEO. Both manipulations of association with the message lead to stronger reactions from investors in between-subjects tests. That is, when news is good (bad), including either more personal pronouns or the CEO's photo leads to more positive (negative) assessments of firm value. We also find that, within-subjects, both manipulations are perceived as indicating greater association with the message, but participants do not expect an effect on investment evaluations. In a fourth experiment, we provide additional evidence that personal pronoun usage affects investor reactions by increasing the perceived credibility of the disclosure.
Download or read book Public Disclosure of Corporate Earnings Forecasts written by Francis A. Lees and published by . This book was released on 1981 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
