Evidence that Management Discussion and Analysis (MD&A) is Part of a Firm's Overall Disclosure Package
Contemporary Accounting Research, Vol. 16, No. 1, 1999
University of Alberta School of Business Research Paper No. 2013-665
Posted: 2 Jul 2013
Date Written: June 1, 1998
Abstract
The objective of this study is to investigate the role, if any, that management discussion and analysis (MD&A) plays in a firm's disclosure package. First, we present evidence regarding the usefulness of MD&A. Our evidence is uniformly supportive of the view that MD&A is a source of new and useful information and indicates that MD&A is used for financial analysis purposes by at least one significant user group, sell-side analysts, who are members of the Toronto Society of Financial Analysts. We then provide evidence on disclosure quality. The results reveal that, overall, MD&A disclosure quality varies with disclosure stimuli similar to those found to influence disclosure choice in other disclosure channels. However, a more refined analysis of the MD&A subcomponents reveals that different factors influence disclosure quality for those subcomponents. Taken together, our results are consistent with the notion that MD&A is a part of a firm's overall disclosure package.
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