The Effect of Financial Statement Classification of Hybrid Financial Instruments on Financial Analysts' Stock Price Judgments

Hopkins, Patrick E.

doi:10.2307/2491424

Cited by 277 publications

(127 citation statements)

References 17 publications

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“…For example, analytical studies define disclosure quality in terms of the precision of a Bayesian investor's beliefs about security value after receiving the disclosure (e.g., Diamond and Verrecchia, 1991). Other studies define disclosure quality as the degree of self-interested bias in the disclosure (e.g., King, 1996), while yet others define quality as the ease with which investors can read and interpret the information (e.g., Hopkins, 1996).…”

Section: The Meaning Of Qualitymentioning

confidence: 99%

A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes

2004

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Acknowledgments:We would like to thank the P D Leake trust (a charity associated with the Centre for Business Performance of the Institute of Chartered Accountants in England and Wales) for funding this project on stakeholder reporting and user needs. The present paper forms part of the first stage of this project, which is to document company practices. A Methodology for Analysing and Evaluating Narratives in Annual Reports: A Comprehensive Descriptive Profile and Metrics for Disclosure Quality Attributes ABSTRACTThere is a consensus that the business reporting model needs to expand to serve the changing information needs of the market and provide the information required for enhanced corporate transparency and accountability. Worldwide, regulators view narrative disclosures as the key to achieving the desired step-change in the quality of corporate reporting. In recent years, accounting researchers have increasingly focused their efforts on investigating disclosure and it is now recognised that there is an urgent need to develop disclosure metrics to facilitate research into voluntary disclosure and quality (Core, 2001). This paper responds to this call and contributes in two principal ways. First, the paper introduces to the academic literature a comprehensive fourdimensional framework for the holistic content analysis of accounting narratives and presents a computer-assisted methodology for implementing this framework. This procedure provides a rich descriptive profile of a company's narrative disclosures based on the coding of topic and three type attributes. Second, the paper explores the complex concept of quality, and the problematic nature of quality measurement. It makes a preliminary attempt to identify some of the attributes of quality (such as relative amount of disclosure and topic spread), suggests observable proxies for these and offers a tentative summary measure of disclosure quality.

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Section: The Meaning Of Qualitymentioning

confidence: 99%

A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes

2004

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“…Finally, Hopkins (1996) is motivated by the behavioral idea that investors' assessment of financial statement items with hybrid natures may be affected by how these items are classified on financial statements. 5 To the best of our knowledge, our paper is the first market-based study of the relation between market pricing and cash flow statement classification for hybrid items, and it is one of the few studies of the market pricing effects of any financial statement classification.…”

Section: Prior Literaturementioning

confidence: 99%

Classification and Market Pricing of the Cash Flows and Accruals on Trading Positions

Ryan

Tucker

Zarowin

2006

The Accounting Review

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We investigate whether the market prices the change in net trading assets as an operating or nonoperating activity or some mixture of the two, and whether this market pricing is consistent with the (fundamental) association of the change in net trading assets with future cash flows from operations. Our investigation is motivated by the observation that -despite the classification of the cash flows on trading positions as operating under FAS 102 -trading is economically a hybrid operating/non-operating activity. Reflecting this hybrid nature, we hypothesize and find that the change in net trading assets has a less positive association with returns and future CFO than do the pure operating components of cash flows and accruals, and that it has a more positive association with returns and future CFO than do the pure non-operating components of cash flows. To the best of our knowledge, our paper is the first to propose and test hypotheses about the valuation implications of such hybrid cash flows and accruals.

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“…For example, Diamond and Verrecchia (1991) defines quality disclosure as the accuracy of investors" beliefs about stock prices following the disclosure. Moreover, quality disclosure is defined as current and potential investors can read and interpret the information easily (Hopkins, 1996). Further, Botosan (2004) stated that the definition of quality should be based on well-supported frameworks elaborated by professional accounting bodies and standard setters because they reflect a generally accepted notion of quality disclosure.…”

Section: Quality Of Disclosurementioning

confidence: 99%

The Impact of Compliance with Codes of Corporate Governance on Quality of Disclosure: Comparative Study between Palestine and Jordan

Abdelkarim¹,

Abusharbeh²

2016

IJEF

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This study seeks to achieve two objectives; (1) to examine the degree of compliance with corporate governance requirements in Palestine and Jordan by listed firms, and (2) to investigate the impact of corporate governance on quality of disclosure for Palestinian and Jordanian listed firms. A sample of 15 Palestinian listed companies and 30 Jordanian listed companies that fully disclosed their financial data in year 2007 and 2014 was used. This research employs multiple regression model and one sample t-test in order to analyze data variables and to test the research hypotheses.The research reveals that there are no statistically significant differences between Jordan and Palestinian listed firms in applying the respective codes of corporate governance, but these two countries are relatively still modest in observing corporate governance rules. This study also concludes that boards of director's characteristics have no significant impact on quality of disclosure in Palestine and Jordan. This indicates that corporate governance practices didn't have any significant effect on quality of disclosurefor Palestinian and Jordanian listed firms.

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The Effect of Financial Statement Classification of Hybrid Financial Instruments on Financial Analysts' Stock Price Judgments

Cited by 277 publications

References 17 publications

A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes

A methodology for analysing and evaluating narratives in annual reports: a comprehensive descriptive profile and metrics for disclosure quality attributes

Classification and Market Pricing of the Cash Flows and Accruals on Trading Positions

The Impact of Compliance with Codes of Corporate Governance on Quality of Disclosure: Comparative Study between Palestine and Jordan

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