投资者重视管理者的前瞻性吗? —— 基于年报文本分析的经验证据

Information disclosure is an important tool to guide capital market price formation and reduce market friction. Numerous accounting and finance studies have found that investors tend to infer a company’s future cash-flow position based on the accounting information it discloses, demonstrating the usefulness of accounting information in decision-making. However, quantitative accounting information is more often a summary of a company’s past operating performance and is often constrained by standards. In contrast, qualitative textual information disclosure in annual reports has more flexibility, and managers can better communicate forward-looking information (e. g. views on the future development of the industry and the company’s business plans) with investors through qualitative disclosure, thus guiding investors’ decisions. Therefore, it is important for both managers and regulators to study investors’ reactions to qualitative disclosures. Given that the value of a company is formed based on investors’ inferences about its future cash-flow level, this paper examines whether forward-looking information disclosed by managers is perceived by investors and influences their investment decisions.

The usefulness of forward-looking information has been studied by domestic and foreign scholars from the perspectives of market reactions, earnings forecasts, and risk assessments; however, few studies have explored whether investors value forward-looking information disclosures of companies from the perspective of the value of cash holdings. This paper fills that gap. The reason for choosing the value of cash holdings perspective is that cash assets are the most liquid assets of a company and are strategically important to the daily operations and future development of the business. Adequate cash reserves help managers to better grasp investment opportunities and create value for the company. Therefore, the value of cash holdings not only reflects the value and efficiency of cash assets in the development of a company, but also conveys information about the valuation of the company by investors, and is a key concern for corporate management and investors. Given that the allocation and use of cash is directly influenced by managers’ plans for future operations, the value of cash holdings can more intuitively reflect investors’ concerns about managers’ foresight. This paper also provides a new perspective for examining the impact of qualitative disclosures on firm value.

In the "Guidelines on the Content and Format of Information Disclosure by Companies Issuing Public Securities No. 2-Content and Format of Annual Reports (Revised 2012)", China Securities Regulatory Commission also encourages managers to disclose forward-looking information about their outlook for future development, requiring that managers should disclose information related to the company′s future development and performance, including industry trends and competitors, business plans, development strategies, opportunities and challenges, supply and demand, use of capital, and risks faced by the company for the next year. However, qualitative information disclosure lacks normative restrictions, and disclosures between different companies may vary greatly. Can this difference be perceived by investors, which will affect their judgment on the value of the company′s cash holdings? This paper uses the “WinGo” forward-looking text metric, which refers to the percentage of the total word frequency of "forward-looking" words in the total word frequency of annual report text, including 120 forward-looking words such as plan, expect, future, target, possible, opportunity, anticipated, future, challenge, and follow-up words. The relationship between forward-looking information disclosure and the value of cash holdings was empirically examined using a sample of A-share listed companies in China from 2007-2018. The results indicate that companies with more forward-looking information disclosures have significantly higher corporate value of cash holdings (i. e., investors assign higher values to cash held in the hands of more forward-looking managers). After replacing the test model, the conclusions of this paper remain robust. Further, the paper finds that, when a company is in a highly competitive industry, it is important for managers to be forward-looking in terms of the macro environment and market trends, so investors place more emphasis on forward-looking disclosures. Specifically, the relationship between forward-looking information disclosure and a company′s value of cash holdings is more significant when the industry entry barrier is low, the industry concentration is high, or product substitutability is high. Meanwhile, when media attention is high, internal control effectiveness is strong and social capital level is high, investors are more confident in the truthfulness of forward-looking information disclosed by managers, and therefore the relationship between forward-looking information disclosure and the value of cash holdings is more significant, further confirming the importance investors attach to forward-looking information. The research helps to reveal the effect of forward-looking information disclosure on investors′ decision making, provides theoretical support for relevant companies′ value enhancement, and provides empirical support and regulatory basis for regulators to further improve China′s MD&A information disclosure regulations and enhance information disclosure supervision. © 2023, Journal of Industrial Engineering and Engineering Management. All Rights Reserved.