Does Company Reputation Matter for Voluntary Disclosure Quality? Evidence from Management Earnings Forecasts

58 Pages Posted: 5 Apr 2012 Last revised: 26 Mar 2017

See all articles by Ying Cao

Ying Cao

The Chinese University of Hong Kong (CUHK) - School of Accountancy

Cory A. Cassell

University of Arkansas

Linda A. Myers

University of Tennessee, Haslam College of Business, Accounting and Information Management

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy

Date Written: March 1, 2017

Abstract

In this study, we explore the association between company reputation and voluntary disclosure quality as proxied for by the issuance and characteristics of management earnings forecasts. We follow prior literature and proxy for company reputation using measures based on Fortune’s America’s Most Admired Companies List. We find that companies with higher reputations are more likely to issue earnings forecasts, and forecast earnings more frequently. We also find that for the subsample of companies selected to the Most Admired List, earnings forecasts issued by higher reputation companies are more accurate. We provide supporting results from a battery of sensitivity analyses designed to alleviate concerns related to potential endogeneity and the influence of managerial ability. Our study contributes to the voluntary disclosure literature by identifying a unique factor that motivates companies to voluntarily disclose better forward-looking information, and to the reputation literature by demonstrating the effect of company reputation on company efforts to reduce information asymmetry with stakeholders.

Keywords: Company reputation, disclosure quality, management forecasts

JEL Classification: M40, M41

Suggested Citation

Cao, Ying and Cassell, Cory A. and Myers, Linda A. and Omer, Thomas C., Does Company Reputation Matter for Voluntary Disclosure Quality? Evidence from Management Earnings Forecasts (March 1, 2017). Available at SSRN: https://ssrn.com/abstract=2034378 or http://dx.doi.org/10.2139/ssrn.2034378

Ying Cao

The Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

Shatin, N.T.
Hong Kong

Cory A. Cassell

University of Arkansas ( email )

Business Bldg. 454
Fayetteville, AR 72701
United States

Linda A. Myers (Contact Author)

University of Tennessee, Haslam College of Business, Accounting and Information Management ( email )

Knoxville, TN
United States

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

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