Corporate Disclosure and Capital Markets

11 Pages Posted: 2 Feb 2020

See all articles by Zaur Abdullazade

Zaur Abdullazade

University of Missouri at Columbia, Department of Economics

Date Written: January 9, 2020

Abstract

Corporate disclosures are critical for functioning of capital markets demanding financial information. Firms provide disclosures through structured and regulated reports, including financial statements, disclosure notes, management recommendations, other compliance filings. In addition, firms voluntarily communicate their proforma financial statements and business data arising from forecasts or corporate reports prepared for investors. Lastly, there are certain disclosures demanded by financial and market intermediaries, industry experts and media.

This paper introduces questions and empirical methods that are pertinent to capital markets research in accounting (hereinafter, CMRA). In section II, the literature review is discussed. Forces giving rise to demand for disclosures in modern capital-market economy, and the institutions increasing the credibility of disclosures are addressed. In the same section, I inform about the main research topics used for studying of financial reporting and disclosures associated with capital markets. I use the disclosure framework to identify research questions within each topic. Empirical evidence and research methodology related with CMRA are reviewed in section III. Section IV discusses reflections on constraints of studying financial reporting issues and their impact on capital markets. Previous studies in CMRA documented disclosures associated with stock performance, bid-ask spreads, transactions, cost of capital, analyst coverage, executive compensation and institutional ownership (Healy, P. et al. 2001). Also, section IV evaluates the previous studies falling short due to endogeneity and measurement error problems and complicating the interpretation of research findings. This paper will aid potential researchers in identification of many open, i.e. unanswered, questions in the CMRA field. Section V summarizes the main ideas, methodology and desired results for the research. Finally, section VI lists bibliography used for the references.

Keywords: Capital markets, Corporate reporting, Fundamental analysis, Valuation, Market efficiency

JEL Classification: F00; F30; G15; M41

Suggested Citation

Abdullazade, Zaur, Corporate Disclosure and Capital Markets (January 9, 2020). Available at SSRN: https://ssrn.com/abstract=3516538 or http://dx.doi.org/10.2139/ssrn.3516538

Zaur Abdullazade (Contact Author)

University of Missouri at Columbia, Department of Economics ( email )

MO
United States
MO 65211 (Fax)

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