10.1016/S0165-4101(01)00018-0

10.1016/S0165-4101(01)00018-0 1 <h5>Introduction</h5> Corporate disclosure is critical for the functioning of an efficient capital market. 1 1 Corporate disclosure can also be directed to stakeholders other than investors. However, there has been relatively little research on these types of voluntary disclosures. Consequently, we focus in this paper on investor communication. Firms provide disclosure through regulated financial reports, including the financial statements, footnotes, management discussion and analysis, and other regulatory filings. In addition, some firms engage in voluntary communication, such as management forecasts, analysts’ presentations and conference calls, press releases, internet sites, and other corporate reports. Finally, there are disclosures about firms by information intermediaries, such as financial analysts, industry experts, and the financial press. In this paper we review research on financial reporting and voluntary disclosure of information by management, summarize key research findings, and identify areas for future work. Section 2 examines the forces that give rise to demand for disclosure in a modern capital-market economy, and the institutions that increase the credibility of disclosures. We argue that demand for financial reporting and disclosure arises from information asymmetry and agency conflicts between managers and outside investors. The credibility of management disclosures is enhanced by regulators, standard setters, auditors http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

10.1016/S0165-4101(01)00018-0

Elsevier — Jun 11, 2020

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Abstract

1 <h5>Introduction</h5> Corporate disclosure is critical for the functioning of an efficient capital market. 1 1 Corporate disclosure can also be directed to stakeholders other than investors. However, there has been relatively little research on these types of voluntary disclosures. Consequently, we focus in this paper on investor communication. Firms provide disclosure through regulated financial reports, including the financial statements, footnotes, management discussion and analysis, and other regulatory filings. In addition, some firms engage in voluntary communication, such as management forecasts, analysts’ presentations and conference calls, press releases, internet sites, and other corporate reports. Finally, there are disclosures about firms by information intermediaries, such as financial analysts, industry experts, and the financial press. In this paper we review research on financial reporting and voluntary disclosure of information by management, summarize key research findings, and identify areas for future work. Section 2 examines the forces that give rise to demand for disclosure in a modern capital-market economy, and the institutions that increase the credibility of disclosures. We argue that demand for financial reporting and disclosure arises from information asymmetry and agency conflicts between managers and outside investors. The credibility of management disclosures is enhanced by regulators, standard setters, auditors

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