Voluntary disclosure choice and earnings information transfer

Article Abstract:

A study was conducted to determine the relation between the occurrence of earnings information transfer and management decisions to release earnings forecasts, and to determine if forecasting companies derive lower earnings information transfers than non-forecasting firms. The sample industries were selected from the 1969 Standard and Poor's Register of Corporations, where 10 firms from each industry had returns data available from the Center for Research in Security Prices from July 1969 through December 1973, and five forecasts had been released during the same period. The study randomly selected 15 firms from 109 meeting the criteria. Research results indicate that non-forecasting firms derived information transfer from the earnings reports of other companies, while the effects were weaker or missing for forecasting firms. A discussion of voluntary disclosure choice and earnings information transfer by J. Richard Dietrich follows.

Methods, Economic aspects, Business forecasting, Earnings per share

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An empirical analysis of the regulation of the defense contracting industry: the Cost Accounting Standards Board

Article Abstract:

A two-stage research approach determines the economic effects of the establishment of the US Cost Accounting Standards Board (CASB) on defense contracting firms, in terms of changes in shareholder wealth. The research compiles data related to stocks' par values for 88 of the 100 largest defense contractors for the two-year period preceding the CASB's establishment in 1970. The research indicates that: (1) shareholder wealth was adversely affected (represented by 2.84 percent average declines in per share stock prices) while Congressional debate focused on the need for the CASB; and (2) this stock price loss was reversed during the second phase of Congressional debates (as represented by average increases in per share prices of 3.26 percent) when the possibility of increased reimbursable expenses for defense contractors seemed the likely result of the CASB's establishment.

Standards, Laws, regulations and rules, Accounting and auditing, Accounting, Industrial policy, Defense industry, Powers and duties, Industry regulations, Government regulation of business, Trade regulation, Cash flow, Cost accounting, Defense contracts, United States. Cost Accounting Standards Board

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Voluntary disclosure credibility and securities prices: evidence from management earnings forecasts, 1969-73

Article Abstract:

It is generally assumed by some academics and policy makers that voluntary disclosures by management enhance the credibility of a company's information. Research was conducted comparing the stock price effects of voluntary disclosures to those of mandatory annual earnings announcements to analyze the extent to which traders view voluntary management forecasts of earnings as less credible than regulated, mandated forms of disclosure. Research results indicate voluntary management forecasts are correlated with large stock price effects. The effect is not uniform and seems to be more closely correlated with the timing of the disclosure.

Prices and rates, Stocks, Stock prices, Disclosure (Securities law), Forecasting

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