Voluntary Disclosures When Seller's Level of Information Is Unknown

1991 ◽  
Vol 29 (1) ◽  
pp. 96 ◽  
Author(s):  
Ronald R. King ◽  
David E. Wallin
Author(s):  
Rachna Prakash ◽  
Ella Mae Matsumura ◽  
Sandra C. Vera-Munoz

Author(s):  
Jimmy F. Downes ◽  
Michelle A. Draeger ◽  
Abbie E. Sadler

We investigate whether audit committees use voluntary disclosures to signal the committees’ higher level of involvement in the audit partner-selection process, which contributes to higher levels of audit quality. Audit committees more involved in the partner-selection process should ensure the selection of a more rigorous partner. We test this conjecture by first identifying partners new to audit engagements. We then compare audit quality for companies whose audit committees disclose involvement in the selection of the new partner to those without this disclosure. We find that this disclosure is positively associated with audit quality (measured using discretionary accruals, misstatements, and meeting consensus analyst forecasts by a very small margin). Our results are more salient for complex companies and those with powerful audit committees. These findings highlight that audit committees use their disclosures to signal involvement in the partner-selection process and are relevant to the Securities and Exchange Commission.


2013 ◽  
Vol 13 (1) ◽  
pp. 33-59 ◽  
Author(s):  
Akmalia M. Ariff ◽  
Steven F. Cahan ◽  
David M. Emanuel

ABSTRACT This paper examines the value relevance of voluntary disclosures about intangibles in eight East Asian countries, and the effect of variation in company-level and country-level governance on the valuation of these disclosures. Using Easton and Sommers' (2003) deflated valuation approach in analyses involving 459 companies, we find that the voluntary disclosures are value relevant, over and above the numbers in the balance sheet and income statement. We also find that the value relevance of these disclosures is conditional on the level of director ownership and the strength of the institutional features of a country.


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