The Incremental Information Content of the Annual Report

Foster, Taylor W.; Jenkins, D. Randall; Vickrey, Don

doi:10.1080/00014788.1986.9729303

Cited by 26 publications

(24 citation statements)

References 0 publications

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“…Abnormal price presence in these dates suggests information content (Beaver 1968). Failure to reject either of the hypotheses is consistent with price invariance and supports the findings of Foster et al (1986), Bernard and Stober (1989), and Cready and Mynatt (1991 ). Thus, it is hypothesized that share price performance after the ARA release is unrelated to the disclosure.…”

Section: Hypothesessupporting

confidence: 77%

“…3 Research has addressed the value of corporate annual reports by examining the price response accompanying the reports' release. Studies by Wilson (1987) and Lobo and Song (1989) suggest a price response to the earlier of the annual report or 10-K. Other studies, including Cready and Mynatt (1991), Foster et al (1986), and Bernard and Stober (1989), fail to detect such a price response. Firth (1981) finds that the ARA provides incremental information to U.K. market participants.…”

Section: Introductionmentioning

confidence: 98%

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The Relative Value of Non‐U.S.‐Based Annual Reports and Accounts: A Price and Trading Volume Analysis

Olibe

Cready

2003

Review of Accounting and Finance

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This paper reports the results of the effects of the release, in the United Kingdom, annual reports and accounts (ARA), on security prices and trading volume of the U.K. firms. If the information reported in the annual reports and accounts (ARA) is relevant, the U.S. security market will respond to the release news through return and volume variances. Both signals are indicators of the relevance of the annual reports and accounts. The results of the analysis suggest the existence of unexpected returns to the annual reports and accounts and no corresponding U.S. trading volume response. The price results are in marked contrast to the findings of previous research that examined the information content of U.S. domestic annual reports, but do not detect a stock price response (e.g., Foster et al. 1986; Bernard and Stober 1989; Cready and Mynatt 1991). Our stock price analyses indicate that non‐U.S. GAAP accounting measures do not impede U.S investors' ability to use U.K. firms' ARA in valuing the sample firms. Indeed, U.S. investors use information from the ARA in their valuation of U.K. firms. Since trading responses to a disclosure are generally more easily detected than price responses (Cready and Hurtt 1999), these findings jointly suggest the provincial nature of the ARA release.

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Section: Hypothesessupporting

confidence: 77%

Section: Introductionmentioning

confidence: 98%

The Relative Value of Non‐U.S.‐Based Annual Reports and Accounts: A Price and Trading Volume Analysis

Olibe

Cready

2003

Review of Accounting and Finance

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“…First is the possibility that individuals may trade on the basis of information they find in the annual report, although such individuals are too small in number to affect the market price of the relevant shares; and second, an unknowable number of shareholders may find the annual report useful (for whatever purpose), but choose not to trade on the strength of the information gained (see, for example, in Australia, Anderson & Epstein, 1995). Some UK evidence is provided by Rippington & Taffler (1995, p. 359) who observe that, although the annual report and accounts in general convey little price sensitive information, some smaller shareholders in small quoted companies may gain investment-useful information from the annual report, and also by Cready & Mynatt (1991), who report that while there is an increase in the number of trades, there is no significant variation in the volume of shares changing hands around the annual report release date (see also Foster et al, 1986).…”

Section: Corporate Reports: the Influences On Demand And Supplymentioning

confidence: 99%

The Corporate Report and the Private Shareholder: Lee and Tweedie Twenty Years On

Bartlett¹,

Chandler²

1997

The British Accounting Review

182

113

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“…What limited research there has been to date (e.g., Chambers and Penman, 1984;Foster et al, 1986;Cready and Mynatt, 1991;but contra Firth, 1981) tends towards a lack of useful information in the annual report for share valuation purposes.…”

Section: Introductionmentioning

confidence: 99%