Voluntary Disclosure of Balance Sheet Information in Quarterly Earnings Announcements
University of Texas at Austin - Red McCombs School of Business
Mark L. DeFond
University of Southern California - Leventhal School of Accounting
Chul W. Park
The University of Hong Kong - School of Business
We investigate a pervasive voluntary disclosure practice ? managers including balance sheets with quarterly earnings announcements. Consistent with expectations, we find that managers voluntarily disclose balance sheets when current earnings are relatively less informative, or when future earnings are relatively more uncertain. Specifically, balance sheet disclosures are more likely among firms: (1) in high technology industries; (2) reporting losses; (3) with larger forecast errors; (4) engaging in mergers or acquisitions; (5) that are younger; and (6) with more volatile stock returns. This is consistent with managers disclosing balance sheets in response to investor demand for value relevant information to supplement earnings.
Number of Pages in PDF File: 35
Keywords: Capital markets, voluntary disclosure
JEL Classification: M41, D82, G12
Date posted: June 10, 2000
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