Effects of prior voluntary disclosure on earnings announcements in an environment with low information and regulation

Pacific Basin Finance Journal

Volumn 19, Issue 3, 2011, Pages 308-329

  Cheng Chee Mun, Eugene ^a   Courtenay, Stephen M ^b   Rahman, Asheq R ^b  

^a Southeast Asia Corporate Finance and Mergers and Acquisitions JP Morgan ^*  (Singapore)

^b MASSEY UNIVERSITY   (New Zealand)

Author keywords

Analyst following; Earnings announcement; Level of voluntary disclosure; Market reaction; Preannouncement information; Precision

Indexed keywords

EID: 79951945422     PISSN: 0927538X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.pacfin.2010.12.004     Document Type: Article

References (60)

1. Ajinkya B.B., Jain P.C. The behavior of daily stock market trading volume. Journal of Accounting and Economics 1989, 11:331-359.
2. Atiase, R.K. 1980. Predisclosure informational asymmetries, firm capitalization, financial reports and security price behavior. Ph.D. dissertation, University of California, Berkeley.
3. Atiase R.K. Predisclosure informational asymmetries, firm capitalization, and security price behavior around earnings announcements. Journal of Accounting Research 1985, 23:21-36.
4. Atiase R.K., Bamber L.S. Trading volume reactions to annual accounting earnings announcements. Journal of Accounting and Economics 1994, 17:309-329.
5. Bamber L.S. Unexpected earnings, firm size and trading volume around quarterly earnings announcements. The Accounting Review 1987, 62:510-532.
6. Bamber, L.S., Barron, O.E., Stevens, D.E., in press. Trading volume around earnings announcements and other financial reports: theory, research design, empirical evidence and directions for future research. Forthcoming in Contemporary Accounting Research.
7. Barron O.E., Byard D., Kim O. Changes in analysts' information around earnings announcements. The Accounting Review 2002, 77:821-846.
8. Barry C.B., Brown S.J. Differential information and the small firm effect. Journal of Financial Economics 1984, 13:283-295.
9. Barry C.B., Brown S.J. Differential information and security market equilibrium. Journal of Financial and Quantitative Analysis 1985, 20:407-422.
10. Barry C.B., Brown S.J. Limited information as a source of risk. The Journal of Portfolio Management 1986, 12:66-72.
11. Barth M.E., Hutton A.P. Information intermediaries and the pricing of accruals. Working paper 2000, Stanford University.
12. Beaver W.H. The information content of annual earnings announcements. Empirical research in accounting: selected studies. Journal of Accounting Research 1968, 6:67-92.
13. Botosan C.A. Disclosure level and the cost of equity capital. The Accounting Review 1997, 72:323-350.
14. Botosan C.A., Plumlee M.A. A re-examination of disclosure level and expected cost of capital. Journal of Accounting Research 2000, 40:21-40.
15. Brooks R. Bid-ask spread components around anticipated announcements. Journal of Financial Research 1994, 17:375-386.
16. Brown S.J., Warner J.B. Using daily stock returns: the case of event studies. Journal of Financial Economics 1985, 14:3-31.
17. Brown L.D., Hagerman R., Griffin P., Zmijewski M. Security analyst superiority relative to univariate time series models in forecasting quarterly earnings. Journal of Accounting and Economics 1987, 9:61-88.
18. Brown L.D., Richardson G.D., Schwager S.J. An information interpretation of financial analyst superiority in forecasting earnings. Journal of Accounting Research 1987, 22:49-67.
19. Cheng E.C.M., Courtenay S.M. Board composition, regulatory regime and voluntary disclosure. The International Journal of Accounting 2006, 41:262-289.
20. Cheng E.C.M., Courtenay S.M., Krishnamurti C. The impact of increased voluntary disclosure on market information asymmetry, informed and uninformed trading. Journal of Contemporary Accounting & Economics 2006, 2:33-72.
21. Collins D.W., Kothari S.P., Rayburn J.D. Firm size and the information content of prices with respect to earnings. Journal of Accounting and Economics 1987, 9:111-138.
22. Cooke T.E. Voluntary disclosure by Swedish companies. Journal of International Financial Management and Accounting 1989, 1:171-195.
23. Core J.E. A review of the empirical disclosure literature: discussion. Journal of Accounting and Economics 2001, 31:441-456.
24. Diamond D.W., Verrecchia R.E. Disclosure, liquidity and the cost of capital. The Journal of Finance 1991, 46:1325-1359.
25. Dimson E. Risk measurement when shares are subject to infrequent trading. Journal of Financial Economics 1979, 7:197-226.
26. Easley D., O'Hara M. Information and the cost of capital. The Journal of Finance 2004, 59:1553-1583.
27. Francis J., Soeffer L. The relative informativeness of analysts' stock recommendations and earnings forecast revisions. Journal of Accounting Research 1997, 35:193-212.
28. Freeman R. The disclosure of replacement cost accounting data and its effect on transaction volumes: a comment. The Accounting Review 1981, 56:177-180.
29. Freeman R.N. The association between accounting earnings and security returns for large and small firms. Journal of Accounting and Economics 1987, 9:195-228.
30. Garfinkel J.A. Measuring investors' opinion divergence. Journal of Accounting Research 2009, 47(5):1317-1348.
31. Gelb D.S., Zarowin P. Corporate disclosure policy and the informativeness of stock prices. Review of Accounting Studies 2002, 7(1):33-51.
32. Givoly D., Lakonishok J. The information content of financial analysts forecasts of earnings: some evidence on semi-strong efficiency. Journal of Accounting and Economics 1979, 2:165-186.
33. Hail L. The impact of voluntary corporate disclosures on the ex-ante cost of capital for Swiss firms. The European Accounting Review 2002, 11(4):741-773.
34. Harris Mary S., Muller Karl A. The market valuation of IAS versus US-GAAP accounting measures using Form 20-F reconciliations. Journal of Accounting & Economics 1999, 26(1-3):285-312.
35. Hausman J.A. Specification tests in econometrics. Econometrica 1978, 46:1251-1271.
36. Healy P.M., Palepu K.G. Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature. Journal of Accounting and Economics 2001, 31:405-440.
37. Healy P., Hutton A., Palepu K. Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary Accounting Research 1999, 16:485-520.
38. Heflin F., Shaw K.W., Wild J.J. Disclosure quality and market liquidity. Working paper 2001, Krannert Graduate School of Management, Purdue University.
39. Holthausen R.W., Verrecchia R.E. The effect of sequential information releases on the variance of price changes in an intertemporal multi-asset market. Journal of Accounting Research 1988, 26:82-106.
40. Kim O., Verrecchia R.E. Trading volume and price reactions to public announcements. Journal of Accounting Research 1991, 29:302-320.
41. Kim O., Verrecchia R.E. Market reaction to anticipated announcements. Journal of Accounting and Economics 1991, 30:273-309.
42. Kim O., Verrecchia R.E. Market liquidity and volume around earnings announcements. Journal of Accounting and Economics 1994, 17:41-67.
43. Krinsky I., Lee J. Earnings announcements and the components of the bid-ask spread. The Journal of Finance 1996, 51:1523-1535.
44. Kross W., Ro B., Schroeder D. Earnings expectations: the analysts' information advantage. The Accounting Review 1990, 65:461-478.
45. Lambert R., Leuz C., Verrecchia R.E. Accounting information, disclosure, and the cost of capital. Journal of Accounting Research 2007, 45:385-420.
46. Lang M., Lundholm R. Cross-sectional determinants of analyst ratings of corporate disclosures. Journal of Accounting Research 1993, 31:246-271.
47. Lang M., Lundholm R. Corporate disclosure policy and analyst behavior. The Accounting Review 1996, 71:467-492.
48. Leuz C., Verrecchia R.E. The economic consequences of increased disclosure. Journal of Accounting Research, 38 Issue Supplement: Studies on Accounting Information and the Economics of the Firm 2000, 91-124.
49. Lundholm R., Myers L.A. Bringing the future forward: the effect of disclosure on the returns-earnings relation. Journal of Accounting Research 2002, 40:809-839.
50. Luo S., Courtenay S.M., Hossain M. The effect of voluntary disclosure, ownership structure and proprietary cost on the return-future earnings relation. Pacific Basin Finance Journal 2006, 14:501-521.
51. Lys T., Sohn S. The association between revisions of financial analysts' earnings forecasts and security price changes. Journal of Accounting and Economics 1990, 13:341-364.
52. Morck R., Yeung B., Yu W. The information content of stock markets: why do emerging markets have synchronous stock price movements?. Journal of Financial Economics 2000, 58:215-260.
53. Newey W.K., West K.D. A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix. Econometrica 1987, 55:703-708.
54. Piotroski J. The impact of reported segment information on market expectations and stock prices. Working paper 1999, University of Chicago.
55. Previts G., Bricker R., Robinson T., Young S. A content analysis of sell-side financial analyst company reports. Accounting Horizons 1994, 55-70. (June).
56. Richardson G. The information content of annual earnings for large and small firms: further empirical evidence. Working paper 1984, University of British Columbia.
57. Ro B. The disclosure of replacement cost accounting data and its effect on transaction volumes: a reply. The Accounting Review 1981, 56:181-187.
58. Scholes M., Williams J. Estimating betas from nonsynchronous data. Journal of Financial Economics 1977, 5:309-328.
59. Welker M. Disclosure policy, information asymmetry and liquidity in equity markets. Contemporary Accounting Research 1995, 11:801-828.
60. White H. A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 1980, 48:817-838.