Voluntary Disclosures and Analyst Feedback
AbstractABSTRACT We study the resource allocation role of voluntary disclosures when feedback from financial markets is potentially useful to managers in undertaking value maximizing actions. Managers weigh the short-term price implications of disclosure against the long-term efficiency gains due to feedback while financial analysts strategically produce information. The model can explain why managers disclose "bad" information (e.g., grim outlook), that "reduces" the stock price, and why prices respond more strongly to bad news relative to good news. We find that not all firms enjoy the same quality of feedback, and that feedback, by itself, does not induce more disclosure but "less". Copyright (c), University of Chicago on behalf of the Accounting Research Center, 2009.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Accounting Research.
Volume (Year): 48 (2010)
Issue (Month): 3 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0021-8456
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- Michael Grüning, 2011. "Capital Market Implications of Corporate Disclosure: German Evidence," BuR - Business Research, German Academic Association for Business Research, vol. 4(1), pages 48-72, March.
- George Emmanuel Iatridis, 2012. "Voluntary IFRS disclosures: evidence from the transition from UK GAAP to IFRSs," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(6), pages 573-597.
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