IDEAS home Printed from https://ideas.repec.org/a/spr/reaccs/v7y2002i1d10.1023_a1017931630916.html
   My bibliography  Save this article

The Interpretation of Information and Corporate Disclosure Strategies

Author

Listed:
  • Sunil Dutta

  • Brett Trueman

Abstract

This paper analyzes a setting in which a firm's manager can credibly disclose facts, but not their valuation implications. Consequently, he is uncertain as to how those disclosed facts will be interpreted by investors. Introducing such uncertainty affects the manager's disclosure strategy in two important ways. First, it becomes a function of the market's prior valuation of the firm since that valuation provides a clue as to how future disclosures are likely to be interpreted by investors. Second, the disclosure strategy is no longer characterized, in general, by a single good news/bad news partition of the manager's private information.

Suggested Citation

  • Sunil Dutta & Brett Trueman, 2002. "The Interpretation of Information and Corporate Disclosure Strategies," Review of Accounting Studies, Springer, vol. 7(1), pages 75-96, March.
    • Handle: RePEc:spr:reaccs:v:7:y:2002:i:1:d:10.1023_a:1017931630916
    DOI: 10.1023/A:1017931630916
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1023/A:1017931630916
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1023/A:1017931630916?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Verrecchia, Robert E., 1983. "Discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 179-194, April.
    2. Brett Trueman, 1997. "Managerial Disclosures and Shareholder Litigation," Review of Accounting Studies, Springer, vol. 2(2), pages 181-199, June.
    3. Indjejikian, Rj, 1991. "The Impact Of Costly Information Interpretation On Firm Disclosure Decisions," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 29(2), pages 277-301.
    4. G.A. Feltham & J.Z. Xie, 1992. "Voluntary financial disclosure in an entry game with continua of types," Contemporary Accounting Research, John Wiley & Sons, vol. 9(1), pages 46-80, September.
    5. Wagenhofer, Alfred, 1990. "Voluntary disclosure with a strategic opponent," Journal of Accounting and Economics, Elsevier, vol. 12(4), pages 341-363, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abe Jong & Gerard Mertens & Marieke Poel & Ronald Dijk, 2014. "How does earnings management influence investor’s perceptions of firm value? Survey evidence from financial analysts," Review of Accounting Studies, Springer, vol. 19(2), pages 606-627, June.
    2. Joost Impink & Martien Lubberink & Bart Praag & David Veenman, 2012. "Did accelerated filing requirements and SOX Section 404 affect the timeliness of 10-K filings?," Review of Accounting Studies, Springer, vol. 17(2), pages 227-253, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Verrecchia, Robert E., 2001. "Essays on disclosure," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 97-180, December.
    2. Anil Arya & Ram N. V. Ramanan, 2023. "Endogenizing Discretion in Disclosures," Management Science, INFORMS, vol. 69(6), pages 3730-3747, June.
    3. Alfred Wagenhofer, 2000. "Disclosure of proprietary information in the course of an acquisition," Accounting and Business Research, Taylor & Francis Journals, vol. 31(1), pages 57-69.
    4. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    5. Zheyuan Zhang & Huiying Wu & Sammy Xiaoyan Ying & Jiaxing You, 2023. "Corporate Innovation and Disclosure Strategy," Abacus, Accounting Foundation, University of Sydney, vol. 59(1), pages 76-133, March.
    6. Ruyun (Ivy) Feng & Michael D. Kimbrough & Sijing Wei, 2022. "The role of information transparency in the product market: an examination of the sustainability of profitability differences," Review of Accounting Studies, Springer, vol. 27(2), pages 668-705, June.
    7. Agapova, Anna & Volkov, Nikanor, 2019. "Guidance on strategic information: Investor-management disagreement and firm intrinsic value," Journal of Banking & Finance, Elsevier, vol. 108(C).
    8. Paula Hill & Helen Short, 2009. "Risk disclosures on the second tier markets of the London Stock Exchange," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 753-780, December.
    9. Paula Hill, 2007. "Declared investment plans and IPO firm value," Applied Financial Economics, Taylor & Francis Journals, vol. 18(1), pages 23-39.
    10. Konrad Lang, 2018. "Voluntary Disclosure and Analyst Forecast," European Accounting Review, Taylor & Francis Journals, vol. 27(1), pages 23-36, January.
    11. Thakor, Anjan V., 2015. "Strategic information disclosure when there is fundamental disagreement," Journal of Financial Intermediation, Elsevier, vol. 24(2), pages 131-153.
    12. Art Durnev & Claudine Mangen, 2009. "Corporate Investments: Learning from Restatements," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 47(3), pages 679-720, June.
    13. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    14. Suijs, Jeroen, 2007. "Voluntary disclosure of information when firms are uncertain of investor response," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 391-410, July.
    15. Arya, Anil & Mittendorf, Brian, 2013. "Discretionary disclosure in the presence of dual distribution channels," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 168-182.
    16. Bruce Ian Carlin & Shaun William Davies & Andrew Miles Iannaccone, 2010. "Competing for Attention in Financial Markets," NBER Working Papers 16085, National Bureau of Economic Research, Inc.
    17. Heitzman, Shane & Wasley, Charles & Zimmerman, Jerold, 2010. "The joint effects of materiality thresholds and voluntary disclosure incentives on firms' disclosure decisions," Journal of Accounting and Economics, Elsevier, vol. 49(1-2), pages 109-132, February.
    18. Young Jun Cho, 2015. "Segment Disclosure Transparency and Internal Capital Market Efficiency: Evidence from SFAS No. 131," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 53(4), pages 669-723, September.
    19. Peter M. Clarkson & Jennifer L. Kao & Gordon D. Richardson, 1994. "The Voluntary Inclusion of Forecasts in the MD&A Section of Annual Reports," Contemporary Accounting Research, John Wiley & Sons, vol. 11(1), pages 423-450, June.
    20. repec:cte:idrepe:id-10-06 is not listed on IDEAS
    21. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:reaccs:v:7:y:2002:i:1:d:10.1023_a:1017931630916. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.