Abstract

https://ssrn.com/abstract=334940
 
 

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Limited Attention, Information Disclosure, and Financial Reporting


David A. Hirshleifer


University of California, Irvine - Paul Merage School of Business

Siew Hong Teoh


University of California - Paul Merage School of Business

September 2003

JAE Boston Conference October 2002

Abstract:     
This paper models firms' choices between alternative means of presenting information, and the effects of different presentations on market prices when investors have limited attention and processing power. In a market equilibrium with partially attentive investors, we examine the effects of alternative: levels of discretion in pro forma earnings disclosure, methods of accounting for employee option compensation, and degrees of aggregation in reporting. We derive empirical implications relating pro forma adjustments, option compensation, the growth, persistence, and informativeness of earnings, short-run managerial incentives, and other firm characteristics to stock price reactions, misvaluation, long-run abnormal returns, and corporate decisions.

Number of Pages in PDF File: 63

Keywords: limited attention, behavioral accounting, investor psychology, capital markets, accounting regulation, disclosure, market efficiency

JEL Classification: G12, G14, G18, G28, G38, M41


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Date posted: January 6, 2004  

Suggested Citation

Hirshleifer, David A. and Teoh, Siew Hong, Limited Attention, Information Disclosure, and Financial Reporting (September 2003). JAE Boston Conference October 2002. Available at SSRN: https://ssrn.com/abstract=334940 or http://dx.doi.org/10.2139/ssrn.334940

Contact Information

David A. Hirshleifer (Contact Author)
University of California, Irvine - Paul Merage School of Business ( email )
Irvine, CA California 92697-3125
United States
Siew Hong Teoh
University of California - Paul Merage School of Business ( email )
Irvine, CA California 92697-3125
United States
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