IDEAS home Printed from https://ideas.repec.org/a/taf/apfiec/v13y2003i9p677-692.html
   My bibliography  Save this article

The association between disclosure level and information quality: voluntary management earnings forecasts

Author

Listed:
  • Hark-Ppin Yhim
  • Khondkar Karim
  • Robert Rutledge

Abstract

This study investigates the empirical association between managers information advantages and disclosure quality choice in the context of management earnings forecasts (MEF). The main hypothesis is that the quality of information available to managers is associated with cross-sectional differences in firm characteristics, and that managers information advantages determine four classes of forecast pattern: no disclosure, qualitative disclosure (open-ended interval estimate or general impression), range (close-interval estimate) forecasts and point estimate. Prior works were extended through utilization of a multi-level forecast precision model, and through comparison of selected firm characteristics in forecast years with non-forecast years. The major findings of this study are as follows. First, the results support the notion that managers are likely to select low-level disclosure precision as the magnitude of earnings volatility increases. Second, the findings indicate that the proportion of outside ownership is significantly associated with high-level forecast precision. Lastly, the results indicate the dispersion of analysts forecasts (before the MEF) is larger in the year of the MEF than in a non-forecast year. A discussion of the implications of these results is provided.

Suggested Citation

  • Hark-Ppin Yhim & Khondkar Karim & Robert Rutledge, 2003. "The association between disclosure level and information quality: voluntary management earnings forecasts," Applied Financial Economics, Taylor & Francis Journals, vol. 13(9), pages 677-692.
  • Handle: RePEc:taf:apfiec:v:13:y:2003:i:9:p:677-692
    DOI: 10.1080/09603100210138538
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/09603100210138538
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:bla:joares:v:19:y:1981:i:2:p:374-383 is not listed on IDEAS
    2. repec:bla:joares:v:6:y:1968:i::p:67-92 is not listed on IDEAS
    3. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. repec:bla:joares:v:23:y:1985:i:1:p:268-295 is not listed on IDEAS
    6. repec:bla:joares:v:29:y:1991:i:2:p:277-301 is not listed on IDEAS
    7. Bhushan, Ravi, 1989. "Firm characteristics and analyst following," Journal of Accounting and Economics, Elsevier, vol. 11(2-3), pages 255-274, July.
    8. Imhoff, Eugene Jr., 1992. "The relation between perceived accounting quality and economic characteristics of the firm," Journal of Accounting and Public Policy, Elsevier, vol. 11(2), pages 97-118.
    9. Verrecchia, Robert E., 1990. "Information quality and discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 12(4), pages 365-380, March.
    10. repec:bla:joares:v:22:y:1984:i:2:p:425-444 is not listed on IDEAS
    11. Kaplan, Robert S & Urwitz, Gabriel, 1979. "Statistical Models of Bond Ratings: A Methodological Inquiry," The Journal of Business, University of Chicago Press, vol. 52(2), pages 231-261, April.
    12. Fried, Dov & Givoly, Dan, 1982. "Financial analysts' forecasts of earnings : A better surrogate for market expectations," Journal of Accounting and Economics, Elsevier, vol. 4(2), pages 85-107, October.
    13. Brown, Lawrence D & Rozeff, Michael S, 1978. "The Superiority of Analyst Forecasts as Measures of Expectations: Evidence from Earnings," Journal of Finance, American Finance Association, vol. 33(1), pages 1-16, March.
    14. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    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. Hichem Khlif & Mohsen Souissi, 2010. "The determinants of corporate disclosure: a meta-analysis," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 18(3), pages 198-219, September.

    More about this item

    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:taf:apfiec:v:13:y:2003:i:9:p:677-692. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAFE20 .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.