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Title: From event-driven to period-driven voluntary earnings disclosure?
Author: Barnea, Jacques
Awarding Body: Brunel University
Current Institution: Henley Business School
Date of Award: 2008
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Empirical evidence points to the scarcity of Voluntary Earnings Disclosure (VED), notwithstanding research and regulatory support of a high level orvoluntary disclosure. Literature and practice ofVED as a strategy is limited, in spite of its evidenced potential contribution to firm's value. A newly emerging VED profile is identified: Firms applying it regularly provide at least one VED in the period between quarterly earnings announcements. This profile is characterised, evaluated and compared with the prevalent approach of issuing VED when warranted by material events and/or when serving firms' or management's ad-hoc interests. In the first part ofthis research, these firms' VEDs, in addition to their regularity, are evidenced to be more frequent, timely and with a higher proportion of confirming news content. Their VED events, most commonly mid-quarter earnings updates, are found to be often pre-scheduled and specifically referred to using period-related terms. These characteristics, controllable by the firm, qualify it as a strategy, which is termed 'Period-Driven VED', as distinct from the prevalent approach termed 'Event-Driven VED'. In the second part, period-driven VED strategy is evidenced to improve the information environment for firms applying it through smaller information gap, as measured by abnormal stock returns, lower analysts' forecast error and dispersion, and fewer surprises around earnings release dates. Tests applied compare both absolute and relative informativeness level. These are performed during earnings announcements windows and also during the entire quarter period. Prior theoretical and empirical research evidence that improved information environment in a firm's stock market carries potential advantages leading to lower cost of capital, enhancing firm's value. Corporate governance, communication and finance practitioners may find period-driven VED strategy, and its components, a valuable alternat.ive, replacing their current ad-hoc approach. This research may also shed new light on the recent public debate and criticism of earnings guidance.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (D.B.A.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available