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The Informativeness of Disclosure Tone

53 Pages Posted: 1 May 2010 Last revised: 7 Feb 2013

Samuel B. Bonsall IV

Pennsylvania State University - Department of Accounting

Zahn Bozanic

Ohio State University (OSU) - Fisher College of Business

Paul E. Fischer

University of Pennsylvania - Accounting Department

Date Written: January 31, 2013

Abstract

Qualitative disclosure accompanying an earnings release is incrementally informative to earnings news (i.e., it is an information substitute for earnings) and it reflects the information content of earnings news (i.e., it is an information complement to earnings). When management provides quantitative guidance, the role of qualitative disclosure as an information substitute for earnings is diminished, yet the role of qualitative disclosure as a complement to quantitative disclosure is enhanced. Qualitative disclosure is more informative as an information substitute for and/or complement to quantitative disclosure when management is more likely to be a credible source of information: when management faces greater litigation risk, when management is less distressed, and when management has had a longer tenure.

Keywords: qualitative disclosure, tone, earnings guidance, litigation, tenure, distress

JEL Classification: G14, K22, M41

Suggested Citation

Bonsall, Samuel B. and Bozanic, Zahn and Fischer, Paul E., The Informativeness of Disclosure Tone (January 31, 2013). Available at SSRN: https://ssrn.com/abstract=1598364 or http://dx.doi.org/10.2139/ssrn.1598364

Samuel B. Bonsall IV

Pennsylvania State University - Department of Accounting ( email )

University Park, PA 16802-3306
United States

Zahn Bozanic (Contact Author)

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Paul E. Fischer

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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