Future‐oriented narrative reporting: determinants and use

Future‐oriented narrative reporting: determinants and use Purpose – The purpose of this paper is to examine the determinants of future‐oriented information in UK annual report narrative sections. The paper also investigates the association between corporate dividend policy and levels of future‐oriented information, as a proxy for information asymmetry. Design/methodology/approach – A computer‐based‐content analysis is used to measure levels of future‐oriented information. Tobit and logit regressions are then applied in order to examine the impact of firm characteristics, and corporate governance characteristics on future‐oriented disclosure. In further tests, Tobit and logit regression models are used to investigate the association between corporate dividend policy and levels of future‐oriented information. Findings – The authors find that firm size is the main factor affecting the firms’ levels of future‐oriented information. This variable is statistically significant in five regression models. In addition, the authors find that profitability, outsider directorships, and insider ownerships affect the levels of future‐oriented information. However, the significance of these variables depends on whether fixed effects or random effects models are used and whether year dummies are included or excluded in the analyses. Finally, the authors find a positive association between corporate dividend policy and information asymmetry (measured by the levels of future‐oriented information). Originality/value – This paper contributes to the existing disclosure studies in two crucial ways. First, it offers the first evidence that levels of future‐oriented information are driven by some firm characteristics, and some corporate governance mechanisms. Second, it offers the first UK evidence of the association between corporate dividend policy and information asymmetry. The results show that dividends and information asymmetry are negatively associated. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Accounting Research Emerald Publishing

Future‐oriented narrative reporting: determinants and use

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0967-5426
DOI
10.1108/09675421111160691
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine the determinants of future‐oriented information in UK annual report narrative sections. The paper also investigates the association between corporate dividend policy and levels of future‐oriented information, as a proxy for information asymmetry. Design/methodology/approach – A computer‐based‐content analysis is used to measure levels of future‐oriented information. Tobit and logit regressions are then applied in order to examine the impact of firm characteristics, and corporate governance characteristics on future‐oriented disclosure. In further tests, Tobit and logit regression models are used to investigate the association between corporate dividend policy and levels of future‐oriented information. Findings – The authors find that firm size is the main factor affecting the firms’ levels of future‐oriented information. This variable is statistically significant in five regression models. In addition, the authors find that profitability, outsider directorships, and insider ownerships affect the levels of future‐oriented information. However, the significance of these variables depends on whether fixed effects or random effects models are used and whether year dummies are included or excluded in the analyses. Finally, the authors find a positive association between corporate dividend policy and information asymmetry (measured by the levels of future‐oriented information). Originality/value – This paper contributes to the existing disclosure studies in two crucial ways. First, it offers the first evidence that levels of future‐oriented information are driven by some firm characteristics, and some corporate governance mechanisms. Second, it offers the first UK evidence of the association between corporate dividend policy and information asymmetry. The results show that dividends and information asymmetry are negatively associated.

Journal

Journal of Applied Accounting ResearchEmerald Publishing

Published: Sep 13, 2011

Keywords: United Kingdom; Narrative reporting; Annual reports; Future‐oriented information; Content analysis; Dividend policy

References

  • The association between dividend payout and outside directorships
    Al‐Najjar, B.; Hussainey, K.
  • Voluntary environmental disclosures by large UK companies
    Brammer, S.; Pavelin, S.
  • Disclosure interactions and the cost of equity capital: evidence from the Spanish continuous market
    Espinosa, M.N.; Trombetta, M.
  • Disclosure quality and stock returns in the UK
    Hussainey, K.; Mouselli, S.
  • Asymmetric information and dividend policy
    Li, K.; Zhao, X.
  • Dividend policy under asymmetric information
    Miller, M.; Rock, K.

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