Abstract

http://ssrn.com/abstract=1974916
 
 

References (78)



 


 



Narrative Disclosure and Earnings Performance: Evidence from R&D Disclosures


Kenneth J. Merkley


Cornell University - Samuel Curtis Johnson Graduate School of Management

August 1, 2013

The Accounting Review, Vol. 89, No. 2, 2014

Abstract:     
This paper examines how earnings performance relates to firms’ narrative R&D disclosure decisions. The unique nature of R&D investments and financial statements’ limited ability to communicate the value of such investments highlight the role of narrative disclosure as a supplement to the financial statements. I predict and find that current earnings performance (adjusted for R&D expense) is negatively related to the quantity of narrative R&D disclosure. Conducting a content analysis of the detail, tone, and readability of narrative R&D disclosures, I find that managers adjust R&D disclosures based on earnings performance to provide relevant information rather than to obfuscate performance. Finally, I provide evidence that market participants find narrative R&D disclosure informative because it significantly affects sell-side analyst behavior, disclosure information content, and information asymmetry.

Number of Pages in PDF File: 52

Keywords: Corporate Disclosure, Research and Development, Earnings Performance, Narrative Disclosure, Qualitative Disclosure

JEL Classification: M41, G10, O31, O32

Accepted Paper Series


Download This Paper

Date posted: December 21, 2011 ; Last revised: July 16, 2014

Suggested Citation

Merkley, Kenneth J., Narrative Disclosure and Earnings Performance: Evidence from R&D Disclosures (August 1, 2013). The Accounting Review, Vol. 89, No. 2, 2014. Available at SSRN: http://ssrn.com/abstract=1974916 or http://dx.doi.org/10.2139/ssrn.1974916

Contact Information

Kenneth J. Merkley (Contact Author)
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States

Feedback to SSRN


Paper statistics
Abstract Views: 1,659
Downloads: 412
Download Rank: 38,421
References:  78

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.640 seconds