Exploring the informativeness of forward-looking statements in public firm disclosures

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)

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Detail(s)

Original languageEnglish
Title of host publication22nd Workshop on Information Technologies and Systems, WITS 2012
PublisherUniversity of Florida, Warrington College
Pages49-54
StatePublished - 2012

Conference

Title22nd Workshop on Information Technologies and Systems, WITS 2012
PlaceUnited States
CityOrlando, FL
Period15 - 16 December 2012

Abstract

As a major communication medium between firm managers and investors, Forward-Looking Statements (FLS) in Management Discussion and Analysis (MD&A) sections in financial reports play an important role in reducing information asymmetry between firms and investors. However, MD&A section is not audited currently and the FLS in MD&A are subjective to management's incentives and other concerns to some extent. This study examines the informativeness of the FLS in the MD&A sections of public firm disclosures. We extract and classify FLS and Non-Forward-Looking Statements (NFLS) in the MD&A sections of annual reports, i.e., 10-K filings, by means of textual analytical methods and tools. We find that for firms with more MD&A disclosures, smaller relative ratios of forward-looking disclosures to non-forward looking disclosures have better future earnings. This finding shows the firm-level informativeness of forward-looking disclosures signaled in the MD&A sections of SEC filings.

Citation Format(s)

Exploring the informativeness of forward-looking statements in public firm disclosures. / Hua, Zhimin; Wu, Xiaoyu; Zhao, J. Leon.

22nd Workshop on Information Technologies and Systems, WITS 2012. University of Florida, Warrington College, 2012. p. 49-54.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)