The Effects of Conservative Reporting on Investor Disagreement

被引:16
作者
D'Augusta, Carlo [1 ]
Bar-Yosef, Sasson [2 ,3 ]
Prencipe, Annalisa [3 ]
机构
[1] Georgia State Univ, Sch Accountancy, J Mack Robinson Coll Business, 35 Broad St, Atlanta, GA 30303 USA
[2] Hebrew Univ Jerusalem, Dept Accounting, Jerusalem, Israel
[3] Bocconi Univ, Dept Accounting, Milan, Italy
关键词
EARNINGS QUALITY; ACCOUNTING CONSERVATISM; INFORMATION-CONTENT; TRADING VOLUME; CROSS-SECTION; DIVERGENCE; OPINION; PRICE; TIMELINESS; INCENTIVES;
D O I
10.1080/09638180.2015.1042890
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
We examine whether the level of a firm's conditional conservatism affects investor disagreement around earnings announcement dates. Investor disagreement is relevant for its repercussions on stock market efficiency. However, the literature related to the effect of firms' reporting policies on disagreement is scant. Prior research suggests that conservatism, by requiring higher verifiability of profits, constrains earnings overstatements and encourages more complete revelations of losses, thus improving the information environment. In this paper, we further hypothesize that these effects of conservatism enhance news credibility and decrease information asymmetry, particularly for bad news announcements. This results in a lower disagreement and improved interpretation of earnings news. We consistently find that conservatism measures are negatively associated with proxies of announcement-time investor disagreement and that this effect is stronger when the firm is reporting bad news. Additional analyses indicate that the impact of conservatism is stronger when market surprise to the announcement is greater, while it is weaker in the presence of frequent and precise voluntary disclosure that preempts the earnings announcement. Finally, we show that a higher percentage of institutional investors' ownership and a higher level of commitment to conservatism reinforce the impact of the latter.
引用
收藏
页码:451 / 485
页数:35
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