Unobservable Precision Choices in Financial Reporting

Penno, Mark

doi:10.2307/2491336

Cited by 45 publications

(23 citation statements)

References 7 publications

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“…Penno (1997) examines the role of prior precision of an estimate with respect to disclosure of the estimate in the context of Dye (1985) and Jung and Kwon (1988) under the assumption that precision is common knowledge, rather than being an object of voluntary disclosure as it is in our paper. Penno (1996) considers a setting where a firm, after observing a public signal about the firm's value, privately chooses the precision of an estimate that the firm is going to issue later. He shows that a bad (good) realization of the public signal induces a choice of a high (low) precision of the estimate.…”

Section: Introductionmentioning

confidence: 99%

Voluntary disclosure of precision information

Hughes

Pae

2004

Journal of Accounting and Economics

123

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Section: Introductionmentioning

confidence: 99%

Voluntary disclosure of precision information

Hughes

Pae

2004

Journal of Accounting and Economics

123

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“…Lang and Lundholm (1993) suggest that firms with negative information (particularly earnings information) might wish to convey more information to enhance creditability or to reduce the likelihood of legal liability. Penno (1996) theorizes that disclosure precision can be forecasted by the knowledge of the reporting firm's relative degree of success.…”

Section: More Disclosure On Bad Newsmentioning

confidence: 99%

“…Penno (1996) calls disclosure with high precision "back-to-the-wall" policy, where initially unfavourable news is followed up by an extensive output of information.…”

Section: More Disclosure On Bad Newsmentioning

confidence: 99%

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Voluntary Disclosure of Corporate Strategy: Determinants and Outcomes - An Empirical Study into the Risks and Payoffs of Communicating Corporate Strategy

Coebergh

2011

SSRN Journal

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VOLUNTARY DISCLOSURE OF CORPORATE STRATEGY: DETERMINANTS AND OUTCOMESKeywords: Voluntary disclosure, corporate strategy.Business leaders increasingly face pressure from stakeholders to be transparent. There appears however little consensus on the risks and payoffs of disclosing vital information such as corporate strategy. To fill this gap, this study analyzes firm-specific determinants and organisational outcomes of voluntary disclosure of corporate strategy. Stakeholder theory and agency theory help to understand whether companies serve their interest to engage with stakeholders and overcome information asymmetries. I connect these theories and propose a comprehensive approach to measure voluntary disclosure of corporate strategy. Hypotheses from the theoretical framework are empirically tested through panel regression of data on identified determinants and outcomes and of disclosed strategy through annual reports, corporate social responsibility reports, corporate websites and corporate press releases by the 70 largest publicly listed companies in the Netherlands from 2003 These questions triggered the writing of this dissertation, being a professional consultant and public relations executive, trying to understand the dynamics of communicating corporate strategy. Or as the topic is formulated in management research terminology:exploring determinants and organisational outcomes of voluntary disclosure of corporate strategy. 8 Research objective and methodologyBased on the identified gap in business practice and academic research, this section formulates the research objective, research questions and methodology of my research. A justification on the methodology is provided, followed by the pursued usefulness of this research for research and business practice. Research objective and research questionsTo fill the gap in business practice and in academic research on voluntary disclosure of corporate strategy, the research objective of this thesis is formulated as follows: To develop understanding and provide empirical evidence that help leaders of publicly listed companies understand how voluntary disclosure of corporate strategy contributes to corporate success.This research objective drives the following research questions:1. What are determinants of voluntary disclosure of corporate strategy?2. What are outcomes of voluntary disclosure of corporate strategy? MethodologyAs no earlier comprehensive research is known on voluntary disclosure of corporate strategy, literature research is conducted to construct a (preliminary) theoretical framework to identify and formulate the determinants and outcomes of voluntary disclosure of corporate strategy. The hypotheses that are based on these determinants and 9 outcomes are tested in a large-scale quantitative study, based on secondary data, available in the public field. The data are longitudinal, spanning a period of six years.The research questions are answered using the following process:• A theoretical framework is constructed to explain volu...

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“…Penno (1996) addresses this question in his theoretical article. He studies the significance of precision choices in financial reporting.…”

Section: Introductionmentioning

confidence: 99%

Impact of nonearnings disclosures on market risk: evidence with interim reports

Kanto

Schadewitz

2003

Applied Financial Economics

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How nonearnings information affects a firm's market risk beta is reported. Nonearnings information is quantified by two indices: one for overall disclosure and the other for purely voluntary disclosure. The data are divided into four categories reflecting the quality of disclosure. The effect of disclosure on beta is found to be nonlinear with the data of interim reports submitted to the Helsinki Stock Exchange in the years 1985-1993. The findings show that, during and after the event, the cross-sectional betas vary in all the classes of disclosure examined. Specifically, the betas are statistically significant mainly in the low quality disclosure class. This indicates that in the remaining disclosure groups firm-specific-factors, rather than aggregate market development, explain the riskiness of a firm's equity.

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Unobservable Precision Choices in Financial Reporting

Cited by 45 publications

References 7 publications

Voluntary disclosure of precision information

Voluntary disclosure of precision information

Voluntary Disclosure of Corporate Strategy: Determinants and Outcomes - An Empirical Study into the Risks and Payoffs of Communicating Corporate Strategy

Impact of nonearnings disclosures on market risk: evidence with interim reports

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