Voluntary disclosure of balance sheet information in quarterly earnings announcements

2002 ◽  
Vol 33 (2) ◽  
pp. 229-251 ◽  
Author(s):  
Shuping Chen ◽  
Mark L. DeFond ◽  
Chul W. Park
Keyword(s):  
Voluntary Disclosure ◽  
Earnings Announcements ◽  
Balance Sheet ◽  
Quarterly Earnings

Firm characteristics associated with concurrent disclosure of GAAP-compliant financial statements with earnings announcements

2018 ◽  
Vol 26 (3) ◽  
pp. 365-381 ◽  
Author(s):  
Thomas D’Angelo ◽  
Samir El-Gazzar ◽  
Rudolph A. Jacob
Keyword(s):  
Financial Reporting ◽  
Voluntary Disclosure ◽  
Earnings Announcements ◽  
Balance Sheet ◽  
Control Sample ◽  
Financial Statements ◽  
Cash Flows ◽  
Content Type ◽  
Quarterly Earnings ◽  
Earnings Releases

Purpose This paper aims to examine the characteristics of firms that voluntary disclose generally accepted accounting principals (GAAP)-compliant statements of income, statement of cash flows (SCF) and balance sheet (BS) concurrently with quarterly earnings releases. Cardinal motivation of the paper stems from the increasing demand over the past decade by professional analysts and the Securities and Exchange Commission for concurrent disclosure of GAAP-compliant financial statements with earnings’ announcements. Design/methodology/approach Using hand-collected archival data, a random sample was identified as disclosing GAAP-compliant SCF and BS with their quarterly earnings releases compared to a control sample identified as non-GAAP-compliant disclosing firms during the 36-month period of 2009-2011, and several hypotheses are tested to determine managements’ incentives to disclose GAAP-compliant versus non-GAAP financials with their earnings releases. Findings The results in this paper suggest that debt financing, corporate governance, operating performance, earnings volatility, industry membership (such as technology and more research and development-intensive) and complexity of operations (number of segments) are significant characteristics of firms electing to concurrently disclose GAAP-compliant SCF and BS with earnings releases. Practical implications The findings discussed in this paper are of special interest to financial reporting policymakers, financial analysts, firm managers and stakeholders and academics. Originality/value The voluntary disclosure literature on quarterly earnings releases is extended by differentiating between GAAP-compliant and non-GAAP-compliant voluntary disclosers. The specific findings of this study may provide valuable input to policymakers as they study prevailing voluntary disclosure rules and practices.

scholarly journals Measuring The Usefulness Of Information For Investors Inferences: The Case Of Quarterly Earnings Announcements

2010 ◽  
Vol 8 (7) ◽  
Author(s):  
C. Catherine Chiang ◽  
Yaw M. Mensah
Keyword(s):  
Financial Performance ◽  
Stock Price ◽  
Value Of Information ◽  
Earnings Announcements ◽  
New Method ◽  
Rates Of Return ◽  
Earnings Announcement ◽  
Quarterly Earnings ◽  
Other Information

In this paper, we propose a new method for assessing the usefulness of information, its inferential value. In the context of accounting and finance, we define the inferential value of information about a firm as how efficaciously the information enables investors to draw correct inferences regarding its future financial performance. On the basis of this definition, we develop a stylized model to measure the proximity of a firm’s future realized rates of return to the estimated rates of return implied by its current stock price. We then use the new measure to test the hypothesis that quarterly earnings announcements have a higher inferential value than other information arriving during interim (non-earnings announcement) periods. Our empirical findings suggest that investors are able to make more informative inferences about a firm’s future profitability based on quarterly earnings announcement than based on information available during interim periods. However, our findings also suggest that, in general, investors do not correctly anticipate future losses. Finally, we find that earnings announcements are as important in anticipating future profitability for larger firms as they are for smaller firms.

Voluntary disclosure and intellectual capital: how CEOs mobilise discretionary accounting narratives to account for value creation stemming from intellectual capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Elisabeth Albertini ◽  
Fabienne Berger-Remy ◽  
Stephane Lefrancq ◽  
Laurence Morgana ◽  
Miloš Petković ◽  
...  
Keyword(s):  
Intellectual Capital ◽  
Value Creation ◽  
Voluntary Disclosure ◽  
Research Question ◽  
Balance Sheet ◽  
Content Type ◽  
Customer Capital ◽  
The Media ◽  
Environmental Capital ◽  
Required Disclosures

PurposeThis research aims to contribute to the current discussion led by international accounting bodies on intellectual capital narratives. Before setting a standard, a preliminary step is to highlight intellectual capital components' sources of value. The objective of this exploratory paper is to contribute to the discussion by proposing a detailed description and taxonomy of intellectual capital based on an analysis of discretionary accounting narrative disclosures in CEO letters.Design/methodology/approachTo answer the research question, a computerised lexical content analysis was done of 241 letters from the CEOs of S&P Euro 350 companies addressed to shareholders.FindingsBeyond the required disclosures about balance sheet intangibles, this study brings to light discretionary narratives about human, digital, customer and environmental capital and their interactions. In particular, CEOs are promoting two new themes, environmental capital and digital capital, as major contributors to value creation.Research limitations/implicationsThe limitations of this study are inherent in the media studied, namely the CEOs' letters to shareholders, which were written as part of the firms' official communication.Practical implicationsThe main contribution of the research is a detailed description of the intellectual capital components that CEOs consider to be at the heart of their companies' models to create value. Human and customer capital were already familiar under the previous classification, but CEOs present digital and environmental capital as areas of opportunity or risk in their discretionary narratives.Originality/valueThe article contributes to the current international discussions on intellectual capital by focusing on discretionary accounting narratives. It seeks to provide guidelines concerning future standards in the current stage of intellectual capital research.

Determinants of the Timing of Quarterly Earnings Announcements

1992 ◽  
Vol 7 (4) ◽  
pp. 395-422 ◽  
Author(s):  
Robert M. Bowen ◽  
Marilyn F. Johnson ◽  
Terry Shevlin ◽  
D. Shores
Keyword(s):  
Adverse Reaction ◽  
Earnings Announcements ◽  
Cost Effective ◽  
Bad News ◽  
Stock Market Crash ◽  
Quarterly Earnings ◽  
Weak Association ◽  
Timing Pattern ◽  
Timing Decisions ◽  
Reported Earnings

Previous empirical research provides descriptive evidence on the timing pattern of earnings announcements but does not attempt to investigate potential explanations. Because some stakeholders are not likely to find it cost-effective to monitor the firm actively, managers have the opportunity to influence the perceptions of relatively uninformed stakeholders through accounting decisions such as the timing of earnings announcements. We provide evidence on this stakeholder explanation of timing decisions by identifying a setting that has the potential to discriminate between this and a confounding explanation for the normal timing pattern suggested in prior studies. Specifically, if managers rushed to report bad news following the October 1987 stock market crash in the belief that the ongoing market chaos reduced the reactions of stakeholders to the news, “normal” timing patterns would be (at least partially) reversed. Our results are generally consistent with prior research in that we document a (somewhat weak) association between earnings news and timing. However, consistent with the stakeholder explanation, we find that the earliest reporting group exhibited, on average, bad news. Thus, we infer that timing decisions for some firms are motivated by a desire to minimize the adverse reaction of stakeholders to bad news. In addition, we report evidence that suggests managers reduced the magnitude of reported earnings following the crash. This evidence corroborates our conclusion that managers are attempting to influence stakeholder perceptions of the firm's earnings performance.

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