Management earnings forecasts & voluntary disclosure

The way in which companies disclose information to outside investors and the market, influences how these companies are perceived and, the ways in which they operate financially.

One form of voluntary corporate disclosure is earnings guidance, a practice by which companies provide earnings forecasts to guide investors and stock market analysts.  Companies in the United States have a long tradition of sharing such predictions.  Such mature disclosure culture is the result of a very developed capital market due to a dense analyst population in Wall Street that is constantly demanding information from publicly-listed companies.

In recent years, Asian economies have undertaken significant reforms through more rigorous disclosure rules, and increasingly, firms are recognising that timely and reliable disclosure is both necessary and reliable.  This in part could be attributed to the ever-increasing trend towards the international harmonisation of accounting standards specifically the widespread acceptance of the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

In this podcast, SMU Assistant Professor of Accounting Holly Yang talks about her research which explores the mechanisms of voluntary disclosures and why she thinks there will be an eventual rise in such disclosures particularly in the sharing of information such as forecasts and predictions.

Assistant Professor Yang completed her doctoral degree at Cornell University in 2009 and taught at the Wharton School of the University of Pennsylvania.  Her research focuses on the role of individual managers in corporate disclosure and determinants of firms’ voluntary disclosure decisions.  She has published in the Journal of Accounting and Economics, Management Science, and Contemporary Accounting Research.  In her work, she is also interested in the emerging research into human psychology and cultural differences in relation to disclosure issues.