The Financial Reporting Environment: Review of the Recent Literature

150 Pages Posted: 6 Oct 2009 Last revised: 13 Aug 2010

Date Written: July 26, 2010

Abstract

The corporate information environment develops endogenously as a consequence of information asymmetries and agency problems between investors, entrepreneurs, and managers. We provide a framework for analyzing the three main decisions that shape the corporate information environment in a capital markets setting: (1) managers’ voluntary reporting and disclosure decisions, (2) reporting and disclosures mandated by regulators, and (3) reporting decisions by third-party intermediaries (analysts). We review current research on disclosure regulation, information intermediaries, and the determinants and economic consequences of corporate disclosure and financial reporting decisions. We conclude that in the last ten years, research has generated a number of useful insights. Despite this progress, we call for researchers to consider interdependencies between the various decisions that shape the corporate information environment and highlight changes in the economic financial environment that raise new and interesting issues for researchers to address.

Keywords: Financial Reporting, Information Environment, Disclosure, Analyst Forecasts

JEL Classification: D80, G12, G14, M41, M43

Suggested Citation

Beyer, Anne and Cohen, Daniel A. and Lys, Thomas Z. and Walther, Beverly R., The Financial Reporting Environment: Review of the Recent Literature (July 26, 2010). Available at SSRN: https://ssrn.com/abstract=1483227 or http://dx.doi.org/10.2139/ssrn.1483227

Anne Beyer

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Daniel A. Cohen

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States
972-883-4772 (Phone)
972-883-6811 (Fax)

Thomas Z. Lys (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Department of Accounting & Information Systems
Evanston, IL 60208
United States
847-491-2673 (Phone)
847-467-1202 (Fax)

Beverly R. Walther

Northwestern University - Department of Accounting Information & Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-467-1595 (Phone)
847-467-1202 (Fax)

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