Incremental information content of required disclosures contained in management discussion and analysis
Article Abstract:
A study was conducted to examine seven mandated disclosures included in Management Discussion and Analysis (MD&A) to determine their information content. Publicly traded firms are required by the SEC to include MD&As, which are unaudited, narrative disclosures, in their financial statements to complement GAAP mandated disclosures. After financial statement information has been controlled for, findings generally revealed that specific MD&A disclosures, especially those focusing on future operations and planned capital spendings, are related to future short-term performance measures and investment decisions. However, the connections with longer-term impacts are generally insignificant. The significant associations with one-period-ahead variables suggest incremental predictive power.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1997
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Information quality and voluntary disclosure
Article Abstract:
The model of uncertain endowment of information created by Dye (1985) and Farrell (1986) and refined by Jung and Kwon (1988) was used to examine the relationship between voluntary disclosures of nonproprietary information and the quality of information managers hold. The focus of the study was on a comprehensive family of functions linking the probability of information acquisition to ex post information quality. Findings revealed that the frequency of voluntary disclosures is negatively related to the quality of information under certain conditions. This implies that the previous assumption that more voluntary disclosure takes place when there is higher information asymmetry is not generally valid.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1997
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A test of the incremental explanatory power of opinions qualified for consistency and uncertainty
Article Abstract:
The power of audit reports to predict business failures is examined. The association between bankruptcy and audit qualifications was examined for univariate and multivariate models using the log-linear technique. For the three years prior to bankruptcy the audit-opinion-only model is the most cost effective prediction model. Predicting all companies as solvent and nonbankrupt was comparable to the statistical prediction models in the fourth and fifth years prior to bankruptcy.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1989
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