Voluntary Disclosures and Analyst Feedback

Journal of Accounting Research, Forthcoming

54 Pages Posted: 1 Oct 2009 Last revised: 6 Oct 2009

See all articles by Nisan Langberg

Nisan Langberg

Tel Aviv University - Coller School of Management

Shiva Sivaramakrishnan

Rice University

Date Written: September 8, 2009

Abstract

We study the resource allocation role of voluntary disclosures when feedback from financial markets is potentially useful to managers in undertaking value maximizing actions. Managers weigh the short-term price implications of disclosure against the long-term efficiency gains due to feedback while financial analysts strategically produce information. The model can explain why managers disclose bad information (e.g., grim outlook), that reduces the stock price, and why prices respond more strongly to bad news relative to good news. We find that not all firms enjoy the same quality of feedback, and that feedback, by itself, does not induce more disclosure but less.

Keywords: Voluntary disclosure, Feedback, Capital Markets, Financial analysts

JEL Classification: G14, M41, M45

Suggested Citation

Langberg, Nisan and Sivaramakrishnan, Shiva, Voluntary Disclosures and Analyst Feedback (September 8, 2009). Journal of Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1480810

Nisan Langberg (Contact Author)

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Shiva Sivaramakrishnan

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

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