The impact of costly information interpretation on firm disclosure decisions
Article Abstract:
The ability of investors to interpret accounting information affects the disclosure decisions of firms. The decision of management to release information on a firm's valuation is based on investor purposes, and this decision controls the quantity of information made available. Disclosure is regarded as an effective signal by investors following the comprehension and interpretation of the disclosure. Increasing the potential informativeness of the disclosure persuades additional investments from shareholders in the interpretation of information through the complementary function of information. As released information is increased, greater efforts towards interpretation encourages investor self-reliance. Consequently, the enhancement of opportunities for risk-sharing lead to a divergence of investors' beliefs.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1991
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The forecast accuracy of individual analysts: evidence of systematic optimism and pessimism
Article Abstract:
P. O'Brien's 1990 analysis of the accuracy of individual analysts' annual earnings forecasts reported in the Institutional Brokers Estimate System between Jul 1975 and Sep 1982 found no evidence of differential forecast accuracy. An analysis of analysts' earnings forecasts during the period 1983 to 1986 also revealed no evidence of differential forecast accuracy among analysts. However, these results do not indicate that the forecast of individual analysts are alike. Analysts persistently are either optimistic or pessimistic in relation to the consensus forecast, a finding confirmed by an analysis of forecasts from 49 firms in the Dec 1986 Fortune index.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1991
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