CEO internal experience and voluntary disclosure quality: Evidence from management forecasts

2019 ◽  
Vol 46 (3-4) ◽  
pp. 420-456 ◽  
Author(s):  
Paul Brockman ◽  
John L. Campbell ◽  
Hye Seung (Grace) Lee ◽  
Jesus M. Salas
Keyword(s):  
Voluntary Disclosure ◽  
Management Forecasts ◽  
Disclosure Quality ◽  
Internal Experience ◽  
Quality Evidence

scholarly journals CEO Career Concerns And Voluntary Disclosure

2016 ◽  
Vol 32 (6) ◽  
pp. 1603 ◽  
Author(s):  
Soo Yeon Park ◽  
Kwan Hee Yoo
Keyword(s):  
Labor Market ◽  
Chief Executive Officers ◽  
Voluntary Disclosure ◽  
Chief Executive ◽  
Career Concerns ◽  
Management Forecasts ◽  
Ceo Tenure ◽  
Disclosure Decisions ◽  
Executive Officers

This paper investigates the relation between Chief Executive Officers (CEO) career concerns and voluntary disclosures using listed firm (KOSPI) data in Korea. Prior research suggests that explicit incentives in the form of CEO stock-based compensation or CEO’s equity ownership mitigate the agency problems of reluctance to make voluntary disclosure. In addition, implicit incentives arising from CEO career concerns are as important as explicit incentives for mitigating agency problems.The labor market assesses CEOs ability and CEO reputation in the market is a valuable asset that is associated with many long-term benefits, such as better future compensation, reappointment in the position, and greater managerial autonomy. CEOs are concerned about such an assessment and these concerns are referred to as career concerns. However, the market has incomplete information about CEOs’ ability especially when the CEOs have short tenures as a CEO position. Hence, CEOs with short tenures have more strong incentives to signal their ability to the labor market so that they can build proper reputation.Implicit incentives arising from CEO career concerns are measured by CEO tenure. I assume that short-tenured CEOs are more career-concerned than long-tenured CEOs. I find that CEOs with short tenures tend to more likely disclose management forecasts. I interpret this result that more career-concerned CEOs have strong incentives to signal their ability to the labor market in order to build their reputations which affect their future payoffs such as compensations and reappointment. In addition, management forecasts, means of voluntary disclosure, are used as effective mechanism. I also find that CEOs with short tenures tend to disclose more accurate management forecasts. This result implies that CEOs with more career concerns have more pressure to provide accurate forecasts because of their reliability in the labor market. Based on these empirical results, I infer that CEOs’ implicit incentives affect their voluntary disclosure decision.This study will contribute to academics and disclosure-related practitioners by documenting about CEOs’ career concerns and their voluntary disclosure decisions.

Foreign Institutional Investors and Corporate Voluntary Disclosure Around the World

2019 ◽  
Vol 94 (5) ◽  
pp. 319-348 ◽  
Author(s):  
Albert Tsang ◽  
Fei Xie ◽  
Xiangang Xin
Keyword(s):  
Institutional Investors ◽  
Voluntary Disclosure ◽  
Home Country ◽  
Investor Protection ◽  
Institutional Ownership ◽  
Management Forecasts ◽  
Disclosure Requirements ◽  
The World ◽  
Foreign Institutional Investors ◽  
The Impact

ABSTRACT We examine the impact of foreign institutional investors on firms' voluntary disclosure practices measured by management forecasts. In a sample of 32 non-U.S. countries, we find that, on average, foreign institutional investments lead to improved voluntary disclosure, and their impact is larger than that of domestic institutional investors. These results are more pronounced when foreign institutional investors (1) are unfamiliar with the firm's home country, (2) have longer investment horizons, and (3) are from countries with stronger investor protection and disclosure requirements than the firm's home country. However, we also find some evidence of voluntary disclosure deterioration in firms with foreign institutional investors from countries with inferior disclosure requirements and securities regulations and with concentrated foreign institutional ownership. Overall, our results suggest that the relation between foreign institutional investors and voluntary disclosure is much richer and more complex than what has been documented for domestic institutional investors in the literature.

scholarly journals Towards a More Transparent Disclosure for Corporate Sustainability: Focusing on the Regulation of Unfaithful Disclosure Designation

2019 ◽  
Vol 11 (22) ◽  
pp. 6460
Author(s):  
Jaehong Lee ◽  
Eunjoo Cho ◽  
Jong Sung Park
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Voluntary Disclosure ◽  
Fixed Effects ◽  
Corporate Sustainability ◽  
Management Forecasts ◽  
Fixed Effects Regression ◽  
Nonfinancial Firms ◽  
Mediation Modeling

This study explored the effect of corporate governance on disclosure transparency, coming from the changes of the largest shareholder and the designation as an unfaithful disclosure firm. In addition, the study verified whether this designation on a firm increases voluntary disclosure level the following year. According to results of analyzing nonfinancial firms listed in the Korea stock market from 2009 to 2017, the more frequently the largest shareholder changed in the recent three years, the significantly higher the possibility of the firm in being designated as an unfaithful disclosure firm. For firms that were designated as unfaithful disclosure firms, voluntary disclosure significantly increased the following year. These results were strengthened by the addition of several more analyses including quality of management forecasts, consideration of fixed-effects regression and the mediation modeling. These results imply the necessity for the supervision of authorities to take caution, while it shows the effectiveness of the unfaithful disclosure designation regulation in improving disclosure transparency.

Disaggregating Management Forecasts to Reduce Investors’ Susceptibility to Earnings Fixation

2011 ◽  
Vol 86 (1) ◽  
pp. 185-208 ◽  
Author(s):  
W. Brooke Elliott ◽  
Jessen L. Hobson ◽  
Kevin E. Jackson
Keyword(s):  
Voluntary Disclosure ◽  
Experimental Results ◽  
Management Forecasts ◽  
Net Income ◽  
Earnings Guidance ◽  
Earnings Announcement ◽  
Management Forecast ◽  
Important Input ◽  
Potential Alternative ◽  
Management Disclosures

ABSTRACT: This study examines disaggregated management forecasts as a mechanism to reduce investors’ fixation on announced earnings. Our experimental results suggest that investors’ earnings fixation is reduced when they initially observe a disaggregated management forecast (earnings and its components) versus when they observe an aggregated forecast (earnings only). We also provide theory-consistent evidence that this reduction in earnings fixation is associated with investors interpreting the summary net income figure as one of several similarly important evaluation inputs rather than a substantially more important input (relative to its components). Finally, we provide evidence that suggests our results are not bounded by the level of emphasis on net income in the subsequent earnings announcement, and not fully explained by three plausible alternative explanations. Our study extends the voluntary disclosure literature by providing evidence that the form of management disclosures can influence investors’ interpretation of subsequently announced information, and contributes to practice by providing a potential alternative to stopping earnings guidance.

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