The perceived credibility of forward-looking performance disclosures
Research output: Contribution to journal › Article
We investigate the credibility of forward-looking performance disclosures (FLPDs) in the narrative sections of annual reports, as perceived by investors. Our proxy for these disclosures is an index of statements about future performance. We find that companies issue more FLPDs when raising debt or conveying bad news in the financial statements. In the presence of these managerial incentives, investor reliance on FLPDs increases with the quality of earnings reported in the audited financial statements. Our results suggest that firms derive a benefit in terms of higher credibility for their narrative disclosures from having a reputation for high quality earnings.
| Original language | English |
|---|---|
| Pages (from-to) | 227-259 |
| Journal | Accounting and Business Research |
| Volume | 44 |
| Issue number | 3 |
| Early online date | 20 Feb 2014 |
| DOIs | |
| Publication status | Published - 4 May 2014 |
Documents
- HUSSAINEY_cright_3A_Perceived credibility of forward-looking performance disclosures
Rights statement: This is an Accepted Manuscript of an article published in Accounting and Business Research, (2014), available online: http://www.tandfonline.com/10.1080/00014788.2013.867403
Accepted author manuscript (Post-print), 333 KB, PDF document
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