Revealing Future Prospects Without Forecasts: The Case of Accelerating Material Contract Filings
66 Pages Posted: 25 Jan 2008 Last revised: 27 May 2014
Date Written: October 19, 2012
Abstract
Extant research on voluntary disclosure about future prospects has focused on two forward-looking disclosure mechanisms: management forecasts and conference calls. This study examines the accelerated filing of material contracts as another type of future-related disclosure that involves no forecasting. I find that firms are more likely to accelerate material contract filings when forward-looking disclosures could lack credibility or arouse litigation concerns. However, for proprietary cost considerations, firms delay contract filings when facing high (low) product market competition from incumbents (potential entrants). I also find that accelerated contract filing is incrementally associated with lower information asymmetry. Overall, while presenting a cost-benefit trade-off that is distinctly different from forward-looking disclosures, accelerated contract filing has been an important alternative channel though which firms communicate future prospects to investors.
Keywords: Material Contracts, Form 8-K, Management Forecasts, Disclosure Credibility, Proprietary costs
JEL Classification: G12, M41, G32, G38
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Role of Supplementary Statements with Management Earnings Forecasts
By Amy P. Hutton, Gregory S. Miller, ...
-
Do Managers Withhold Bad News?
By S.p. Kothari, Susan Shu, ...
-
By Marilyn F. Johnson, Ron Kasznik, ...
-
Does Disclosure Deter or Trigger Litigation?
By Laura Casares Field, Michelle Lowry, ...
-
Shareholder Wealth Effects of the Private Securities Litigation Reform Act of 1995
By Marilyn F. Johnson, Ron Kasznik, ...
-
Do Conference Calls Affect Analysts' Forecasts?
By Robert M. Bowen, Angela K. Davis, ...
-
The Financial Reporting Environment: Review of the Recent Literature
By Anne Beyer, Daniel A. Cohen, ...
-
Management Earnings Forecasts: A Review and Framework
By D. Eric Hirst, Lisa Koonce, ...