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

Listed author(s):
  • Blacconiere, Walter G.
  • Frederickson, James R.
  • Johnson, Marilyn F.
  • Lewis, Melissa F.
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165410111000656
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    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 52 (2011)
    Issue (Month): 2 ()
    Pages: 235-251

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    Handle: RePEc:eee:jaecon:v:52:y:2011:i:2:p:235-251
    DOI: 10.1016/j.jacceco.2011.09.002
    Contact details of provider: Web page: http://www.elsevier.com/locate/jae

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