Strategic Formatting in Firm Disclosures

42 Pages Posted: 29 Apr 2022 Last revised: 31 May 2022

See all articles by H. Scott Asay

H. Scott Asay

University of Iowa - Department of Accounting

Cory Hinds

University of Iowa - Department of Accounting

Kristina M. Rennekamp

SC Johnson Graduate School of Management; Cornell SC Johnson College of Business

Date Written: May 30, 2022

Abstract

Prior research finds that qualitative features of disclosures can have important effects on investor judgments. We extend this research by examining how preparers’ disclosure formatting choices vary in response to firm incentives. Using an experiment, we manipulate firm performance and capital market pressure, and observe experienced IROs’ decisions regarding (1) how financial information will be presented, (2) whether certain information will be emphasized, and (3) where financial information will be located. To operationalize these formatting choices, we examine their use of tables, bulleted lists, and headlines within an earnings announcement, each of which alters the salience of firm performance information. We find that preparers make formatting choices that highlight positive performance information and deemphasize negative performance information, and supplemental analyses corroborate their intention to use certain qualitative disclosure features to strategically alter the salience of firm performance information.

Keywords: earnings announcements; qualitative disclosure features; disclosure format; investor relations officers

JEL Classification: M41, M48, M49

Suggested Citation

Asay, Hamilton Scott and Hinds, Cory and Rennekamp, Kristina M., Strategic Formatting in Firm Disclosures (May 30, 2022). Available at SSRN: https://ssrn.com/abstract=4089745 or http://dx.doi.org/10.2139/ssrn.4089745

Hamilton Scott Asay

University of Iowa - Department of Accounting ( email )

S232 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Cory Hinds

University of Iowa - Department of Accounting ( email )

W347 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Kristina M. Rennekamp (Contact Author)

SC Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States
607-255-0500 (Phone)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

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