Abstract
This study examines the effect of voluntary disclosure on the relation between current annual return, contemporaneous annual earnings and future earnings, and the influence of both ownership structure and proprietary cost on this relation. Regression analyses reveal that firms with higher voluntary disclosure levels contain more information about future performance in their current stock return. This positive association is weaker if (1) management holds a higher proportion of share ownership in the company, (2) proprietary cost is present and (3) government ownership exists. However, the existence of outside block ownership significantly decreases managers' ability to limit voluntary disclosure. Our findings remain significant after controlling for the usual factors (size, growth, etc.) in the return-earnings regression, and a series of sensitivity and robustness checks.
| Original language | English |
|---|---|
| Pages (from-to) | 501-521 |
| Number of pages | 21 |
| Journal | Pacific Basin Finance Journal |
| Volume | 14 |
| Issue number | 5 |
| DOIs | |
| State | Published - Nov 2006 |
| Externally published | Yes |
Bibliographical note
Funding Information:We thank Asheq Rahman, Ferdinand Gul, J.J. Williams and participants at the 2002 Asia Pacific Conference on International Accounting Issues, 2003 Asia Pacific Journal of Accounting and Economics Symposium, 2003 American Accounting Association Annual Meeting and the 2005 European Accounting Association Annual Congress for helpful comments. Financial support received from the Association of International Accountants (AIA) and Nanyang Technological University is gratefully acknowledged.
Keywords
- Government-linked company
- Ownership structure
- Proprietary costs
- Return-future earnings relation
- Voluntary disclosure
ASJC Scopus subject areas
- Finance
- Economics and Econometrics