Forward-Looking MD&A Disclosures and the Information Environment

Management Science, Vol. 61, No. 5, pp. 931-948, 2015

33 Pages Posted: 30 Jan 2014 Last revised: 29 Dec 2016

See all articles by Volkan Muslu

Volkan Muslu

C.T. Bauer College of Business University of Houston

Suresh Radhakrishnan

JSOM, University of Texas at Dallas

K.R. Subramanyam

University of Southern California - Leventhal School of Accounting

Dongkuk Lim

Idaho State University - Department of Accounting

Date Written: 2015

Abstract

We use computer-intensive techniques to study the informational properties of forward-looking disclosures in the MD&A sections of 10-K filings made with the SEC. We find that firms make more forward-looking MD&A disclosures when their stock prices have lower informational efficiency, i.e., when their stock prices poorly reflect future earnings information. The greater levels of forward-looking MD&A disclosures help improve but are unable to completely mitigate the lower informational efficiency of stock prices for such firms. These findings are stronger for operations-related forward-looking disclosures, disclosures that are made prior to 2000, and disclosures made by loss firms.

Keywords: Disclosure, 10-K filings, forward-looking

JEL Classification: M4

Suggested Citation

Muslu, Volkan and Radhakrishnan, Suresh and Subramanyam, K.R. and Lim, Dongkuk, Forward-Looking MD&A Disclosures and the Information Environment (2015). Management Science, Vol. 61, No. 5, pp. 931-948, 2015. Available at SSRN: https://ssrn.com/abstract=2386967

Volkan Muslu (Contact Author)

C.T. Bauer College of Business University of Houston ( email )

4750 Calhoun Road
Houston, TX 77204
United States
713 7434924 (Phone)

Suresh Radhakrishnan

JSOM, University of Texas at Dallas ( email )

Mail Stop SM 41
800 West Campbell Road
Richardson, TX 75080
United States
972-883-4438 (Phone)
972-883-6811 (Fax)

K.R. Subramanyam

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States
213-740-5017 (Phone)
213-747-2815 (Fax)

Dongkuk Lim

Idaho State University - Department of Accounting ( email )

United States
2082822975 (Phone)

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