Value Relevance of Voluntary Disclosure in the Annual Report

22 Pages Posted: 13 May 2008

See all articles by Jesper Møller Banghøj

Jesper Møller Banghøj

Copenhagen Business School

Thomas Plenborg

Copenhagen Business School

Date Written: 2007-06-27

Abstract

This paper examines whether the level of voluntary disclosure affects the association between current returns and future earnings. Economic theory suggests that firms might find it advantageous to provide additional pieces of information (i.e. voluntary disclosure) to investors and analysts. Our results indicate that more voluntary disclosure does not improve the association between current returns and future earnings (i.e. current returns do not reflect more future earnings news). This finding raises the question of whether voluntary information in the annual report contains value-relevant information about future earnings or if investors are simply not capable of incorporating voluntary information in the firm value estimates.

Suggested Citation

Banghøj, Jesper Møller and Plenborg, Thomas, Value Relevance of Voluntary Disclosure in the Annual Report (2007-06-27). Accounting & Finance, Vol. 48, Issue 2, pp. 159-180, June 2008, Available at SSRN: https://ssrn.com/abstract=1131466 or http://dx.doi.org/10.1111/j.1467-629X.2007.00240.x

Jesper Møller Banghøj (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Thomas Plenborg

Copenhagen Business School ( email )

Department of Accounting & Auditing
Solbjerg Plads 3
DK - 2000 Frederiksberg
Denmark

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