Voluntary Disclosures and Analyst Feedback
Journal of Accounting Research, Forthcoming
54 Pages Posted: 1 Oct 2009 Last revised: 6 Oct 2009
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Real Effects of Financial Markets
By Philip Bond, Alex Edmans, ...
-
The Real Effects of Financial Markets
By Philip Bond, Alex Edmans, ...
-
The Real Effects of Financial Shocks: Evidence from Exogenous Changes in Analyst Coverage
By François Derrien and Ambrus Kecskes
-
The Real Effects of Analyst Coverage
By François Derrien and Ambrus Kecskes
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...
-
Shaping Liquidity: On the Causal Effects of Voluntary Disclosure
By Karthik Balakrishnan, Mary Brooke Billings, ...