10-K Disclosure Repetition and Managerial Reporting Incentives

Forthcoming in the Journal of Financial Reporting

Posted: 27 Aug 2014 Last revised: 21 Sep 2017

See all articles by Richard A. Cazier

Richard A. Cazier

University of Texas at El Paso - Department of Accounting

Ray J. Pfeiffer

Texas Christian University - Neeley School of Business

Date Written: December 1, 2016

Abstract

Standard setters and investors have expressed concern about the substantial amount of repetition of information found within firms’ 10-K disclosures. Ostensibly, such repetition is the result of overlapping disclosure requirements that solicit similar information in separate sections of the 10-K. Our evidence, however, suggests that repetition of information within the 10-K is also a strategic response to managers’ reporting incentives. We find evidence that, on average, discretionary repetition of information within the 10-K is driven by both litigation concerns and by managers’ incentives to report information more opaquely when earnings performance is poor. We find that greater repetition of information within the 10-K is associated with slower price discovery following the 10-K filing date. Overall, our results suggest that current overlap in disclosure requirements allows managers to repeat information in ways that serve their strategic reporting purposes but that do not result in increased clarity for investors.

Keywords: Disclosure regulation, Disclosure effectiveness, Narrative disclosure, Repetition, Textual Analysis

JEL Classification: D8, G38, M4

Suggested Citation

Cazier, Richard A. and Pfeiffer, Ray J., 10-K Disclosure Repetition and Managerial Reporting Incentives (December 1, 2016). Forthcoming in the Journal of Financial Reporting. Available at SSRN: https://ssrn.com/abstract=2487259 or http://dx.doi.org/10.2139/ssrn.2487259

Richard A. Cazier (Contact Author)

University of Texas at El Paso - Department of Accounting ( email )

500 W University Ave
El Paso, TX 79902
United States
915-747-7755 (Phone)

Ray J. Pfeiffer

Texas Christian University - Neeley School of Business ( email )

TCU Box 298530
Fort Worth, TX 76129
United States
817-257-6435 (Phone)

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