Forward-Looking MD&A Disclosures and the Information Environment

2014/08/01 by Volkan Muslu, Suresh Radhakrishnan, K. R. Subramanyam +2 · 2 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Auditing, Earnings Management, Governance #Financial Markets and Investment Strategies #Financial Reporting and Valuation Research

paper · doi:10.1287/mnsc.2014.1921

Abstract

We use computer-intensive techniques to study the informational properties of forward-looking disclosures in the management discussion and analysis (MD&A) sections of 10-K filings made with the Securities and Exchange Commission. We find that firms make more forward-looking MD&A disclosures when their stock prices have lower informational efficiency, i.e., when their stock prices poorly reflect future earnings information. The greater levels of forward-looking MD&A disclosures help improve yet are unable to completely mitigate the lower informational efficiency of stock prices for such firms. These findings are stronger for operations-related forward-looking disclosures, disclosures that are made prior to 2000, and disclosures made by loss firms. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1921 . This paper was accepted by Mary Barth, accounting.

Citations

• Corporate Disclosure Policy and Analyst Behavior.
• Bringing the Future Forward: The Effect of Disclosure on the Returns‐Earnings Relation
• Cross-Sectional Determinants of Analyst Ratings of Corporate Disclosures
• The Information Content of Forward‐Looking Statements in Corporate Filings—A Naïve Bayesian Machine Learning Approach
• Disclosure of Nonproprietary Information
• Large‐Sample Evidence on Firms’ Year‐over‐Year MD&A Modifications

Cited by

• Measuring Corporate Human Capital Disclosures: Lexicon, Data, Code, and Research Opportunities
• Corporate financing constraints and environmental information disclosure hype

Related

• Algorithmic Trading and Forward‐Looking MD&A Disclosures
• Large‐Sample Evidence on Firms’ Year‐over‐Year MD&A Modifications
• The Information Content of Forward‐Looking Statements in Corporate Filings—A Naïve Bayesian Machine Learning Approach
• The Impact of Securities Litigation Reform on the Disclosure of Forward‐Looking Information By High Technology Firms
• Bringing the Future Forward: The Effect of Disclosure on the Returns‐Earnings Relation