The Association between Disclosure, Distress, and Failure
| Autor: | Lori Holder-Webb, Jaffrey R. Cohen |
|---|---|
| Rok vydání: | 2007 |
| Předmět: |
Economics and Econometrics
Scrutiny business.industry media_common.quotation_subject Accounting Sample (statistics) Public relations Investment (macroeconomics) General Business Management and Accounting Distress Arts and Humanities (miscellaneous) Action (philosophy) restrict Economics ComputingMilieux_COMPUTERSANDSOCIETY Quality (business) Business and International Management Business ethics business Law media_common |
| Zdroj: | Journal of Business Ethics. 75:301-314 |
| ISSN: | 1573-0697 0167-4544 |
| DOI: | 10.1007/s10551-006-9254-7 |
| Popis: | The quality of corporate disclosures has drawn increasing levels of criticism from Congress and the SEC. A subject of particularly intense scrutiny and action is the Management’s Discussion and Analysis (MD&A). This narrative, intended to provide an inside perspective on the reported results of the firm, is particularly important when attempting to evaluate the investment prospects of the marginal or poorly performing firm. However, managers may restrict the information content of the disclosure, raising potential concerns about ethical behavior. In this study, we employ a proprietary instrument to measure the quality of MD&A disclosures for a sample of firms entering financial distress. We evaluate the disclosure behavior of these firms in an effort to determine whether changes in the disclosure appear to be motivated primarily by economic or ethical concerns. We find, on average, that firms increase disclosure quality in the year of initial distress. However, sustained increases in disclosure quality are limited to firms that subsequently recover from the distress. The results suggest that observed changes in disclosure are driven primarily by economic considerations, rather than ethical ones, especially in good economic times. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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