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The Valuation Relevance of Voluntary Disclosures: A Comparative Analysis of the Disclosure Behaviour of Major Pharmaceutical Companies in Sweden and the UK


  • Gray, Sidney

    (School of International Business)

  • Skogsvik, Kenth

    () (Dept. of Business Administration, Stockholm School of Economics)


In order to enhance our understanding of the content and context of voluntary disclosures, the disclosure behaviour of a sample of Swedish and UK pharmaceutical companies is investigated in this paper. The investigation has been guided by a fundamental ("residual income") valuation model, based on accounting concepts and conservative measurement principles, in order to focus on voluntary disclosures which are expected to be valuation relevant. The empirical survey has been confined to three Swedish and three UK major pharmaceutical companies, whose annual financial reports have been studied during the ten year period 1984-93. The results show that pharmaceutical companies in both countries have provided substantial voluntary disclosures being relevant for the assessment of competitive advantages, especially with regard to research and development activities. Disclosures concerning dividend policy, future business growth and the prediction of net income, were more prevalent among the Swedish companies, indicating that these companies might have been more concerned about their relations to stock market investors. With regard to the valuation impact of accounting measurement biases - cost matching bias of expenses and measurement bias of assets in particular - voluntary disclosures in the financial reports were rare for all but one Swedish company.

Suggested Citation

  • Gray, Sidney & Skogsvik, Kenth, 1999. "The Valuation Relevance of Voluntary Disclosures: A Comparative Analysis of the Disclosure Behaviour of Major Pharmaceutical Companies in Sweden and the UK," SSE/EFI Working Paper Series in Business Administration 1999:9, Stockholm School of Economics, revised 15 Jan 2001.
  • Handle: RePEc:hhb:hastba:1999_009

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    References listed on IDEAS

    1. Gordon L. Clark, 2002. "London in the European financial services industry: locational advantage and product complementarities," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 433-453, October.
    2. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
    3. Michael H. Grote, 2002. "A value chain approach to financial centres - The case of Frankfurt," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 93(4), pages 412-423, September.
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    More about this item


    Conservative measurement bias; disclosure behaviour; equity valuation; investor relations; pharmaceutical companies; voluntary disclosures;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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