The perceived credibility of forward-looking performance disclosures

Vasiliki Athanasakou, Khaled Hussainey

Research output: Contribution to journalArticleScientificpeer-review

32 Citations (Scopus)

Abstract

We investigate the credibility of forward-looking performance disclosures (FLPDs) in the narrative sections of annual reports, as perceived by investors. Our proxy for these disclosures is an index of statements about future performance. We find that companies issue more FLPDs when raising debt or conveying bad news in the financial statements. In the presence of these managerial incentives, investor reliance on FLPDs increases with the quality of earnings reported in the audited financial statements. Our results suggest that firms derive a benefit in terms of higher credibility for their narrative disclosures from having a reputation for high quality earnings.
Original languageEnglish
Peer-reviewed scientific journalAccounting and Business Research
Volume44
Issue number3
Pages (from-to)227-259
Number of pages33
ISSN0001-4788
DOIs
Publication statusPublished - 2014
MoE publication typeA1 Journal article - refereed

Keywords

  • 512 Business and Management

Fingerprint Dive into the research topics of 'The perceived credibility of forward-looking performance disclosures'. Together they form a unique fingerprint.

Cite this