Content Analysis of Information Cited in Reports of Sell-Side Financial Analysts

Marshall, S. Brooks

doi:10.2469/dig.v28.n2.254

Cited by 23 publications

(2 citation statements)

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“…We study volume reduction management in 10-K filings because these filings are a main source of information for market participants (Lehavy et al, 2011; R. K. Rogers & Grant, 1998). Although the U.S. Securities and Exchange Commission (SEC) stipulates a basic framework and minimum standards for financial disclosures in the 10-K, considerable discretion remains in terms of what information is provided and how that information is presented (Lang & Lundholm, 1993).…”

Section: Introductionmentioning

confidence: 99%

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Strategic Use of Volume of Financial Items in 10-K Reports

Cheng

Huang

et al. 2021

Journal of Accounting, Auditing & Finance

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We investigate whether firms limit the volume of financial items in annual reports (including the financial statements and footnotes) to obfuscate poor future firm performance, and how investors react to this reduced volume. We estimate abnormal volume to capture managers’ discretion over reporting in the 10-K and find that abnormally low volume predicts poor future earnings. This relation is more pronounced in firms where the market has difficulty in detecting managerial intervention in the disclosure process. We also find that abnormally low volume predicts negative future returns, suggesting that managers benefit from disclosing fewer financial items by delaying the incorporation of bad news into stock prices. Further corroborating our results, we find that the volume is abnormally low when there exist strong managerial incentives to withhold bad news and manipulate investor perceptions upward. Overall, our evidence is consistent with the notion that managers attempt to obfuscate poor future performance and inflate current stock prices by disclosing fewer financial items in the 10-K.

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Section: Introductionmentioning

confidence: 99%

“…We study volume reduction management in 10-K filings because these filings are a main source of information for market participants (Lehavy et al, 2011; R. K. Rogers & Grant, 1998).…”

Section: Introductionmentioning

confidence: 99%

Strategic Use of Volume of Financial Items in 10-K Reports

Cheng

Huang

et al. 2021

Journal of Accounting, Auditing & Finance

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Analysts' earnings forecasts and technological conditions in the firm's investment environment

Lambert

Matolcsy

Wyatt

2015

Journal of Contemporary Accounting & Economics

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Shorter and easier is more useful: A longitudinal analysis of how financial report enforcement affects individual investors

Pascual‐Ezama

Paredes

Sánchez-Martín

et al. 2018

Journal of Behavioral and Experimental Economics

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According to the literature, individual investors rarely use Accounting and Financial Information (AFI), even though they do not give it a particularly low valuation when asked. This behavior increases the risk to lose investments. The main contribution of this paper is to propose a new AFI format: a one-page report that is short and easy to understand, as a complement to the long and complex traditional format in order to increase the usefulness of information for investors and to decrease investment risk. Two experiments provide evidence about the increased usefulness of AFI when using the new proposed format. More importantly, it seems that results in terms of profits also improve considerably in medium (one year) and long-term (four year) investments, in contrast to more modest profits of speculative investments. Furthermore, this difference occurs regardless of the investors' previous experience.

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Content Analysis of Information Cited in Reports of Sell-Side Financial Analysts

Cited by 23 publications

References 0 publications

Strategic Use of Volume of Financial Items in 10-K Reports

Strategic Use of Volume of Financial Items in 10-K Reports

Analysts' earnings forecasts and technological conditions in the firm's investment environment

Shorter and easier is more useful: A longitudinal analysis of how financial report enforcement affects individual investors

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