Browsing by Subject "Disclosure in accounting"
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Item An investigation of the usefulness of reserve recognition accounting data(Texas Tech University, 1982-08) Haskin, Daniel LeeNot availableItem The differential effects of proprietary cost on the quality versus quantity of voluntary corporate disclosures(2005) Zhang, May Hongmei; Jennings, RossRecent analytic research distinguishes between the quantity and quality of public information and demonstrates their independent roles in affecting cost of capital. However, there exists no empirical evidence on the differences between the two. This study decomposes voluntary disclosure decisions into the quantity decision and the quality decision and examines their differential relations with disclosure determinants such as proprietary cost in a joint determination system. I find strong evidence of contrasting effects of proprietary cost on the quantity versus quality of voluntary disclosures. Firms with high proprietary cost provide more frequent but less precise and less accurate information disclosures than firms with lower proprietary cost, consistent with the explanations that high proprietary cost firms lower disclosure quality to reduce the usefulness of the information to competitors and instead they use a high quantity of disclosures to resolve information asymmetry in the capital market in response to investors’ demand for information. Three-stage least squares (3SLS) regression results reveal a substitute relation between quantity and quality of disclosures for firms facing high proprietary cost. Results of this study highlight the importance of the distinction between quantity and quality of information in discretionary disclosure research. Future research may examine the differential capital market consequences of the quantity and quality of voluntary disclosures.Item The joint impact of commitment to disclosure and prior forecast accuracy on managers' forecasting credibility(2008-08) Venkataraman, Shankar, 1969-; Koonce, Lisa Lynn, 1959-; Hirst, EricAlthough managers rate concerns about being seen as committed disclosers as an important consideration in their voluntary disclosure decisions, prior research has paid limited attention to how investors view commitment to disclosure. This study experimentally tests two competing perspectives relating to how managers' commitment to disclosure and prior forecast accuracy jointly influence managers' forecasting credibility. The first perspective (the normative perspective) draws on economic theory and the second perspective (the omission bias perspective) draws on theory from psychology. The normative perspective suggests that commitment to disclosure and prior forecast accuracy will independently influence managers' forecasting credibility. In contrast, the omission bias literature suggests that the influence of commitment to disclosure on managers' forecasting credibility depends on managers' prior forecast accuracy. In other words, the normative perspective suggests two main effects, whereas the omission bias perspective suggests a commitment to disclosure x accuracy interaction. To test the competing predictions relating to the joint impact of commitment to disclosure and prior forecast accuracy on managers' forecasting credibility, I conduct an experiment. Results of this experiment support the omission bias perspective. Participants in the role of investors rate more (less) committed managers as more (less) credible, but only when they are also accurate. When managers are inaccurate, however, this relationship reverses. That is, more committed managers are viewed as less credible relative to their less committed peers. These results suggest that managers' concerns about commitment to disclosure are indeed valid, but only when they are accurate. When managers are less accurate, commitment to disclosure hurts, rather than helps, managers' credibility. Participants' valuation judgments as well as their judgments relating to a current disclosure are positively associated with their judgments of managers' forecasting credibility, suggesting that their assessment of managers' credibility may have significant valuation consequences. This study contributes to the voluntary disclosure literature and has implications for managers who provide earnings forecasts and for investors who use these forecasts in their investment decisions.Item Public employee retirement system reports: a study of user information processing ability(Texas Tech University, 1986-05) Willits, Stephen DImproved accounting reports should result when standards setters are provided with evidence regarding the ability of public employee retirement system (PERS) financial report users to (1) interpret reported pension information, and (2) Impound actuarial data. Accordingly, this study was conducted to gain insight into the decision making process(es) of PERS financial report users and preparers. A field experiment employing a simulated decision making situation was used to gather data. Respondents made judgments about a fictitious PERS and then completed two exercises that (1) measured their knowledge of the effects of actuarial methods and assumptions on reported data, and (2) tested their ability to properly consider these effects when comparing the funding of the fictitious PERS to that of other pension plans. Two general research questions were addressed: (1) does the benefit-liability measure used for PERS financial reporting and/or the amount of supplemental disclosure affect users' perceptions of the PERS financial condition, and (2) do users of PERS financial statements understand the effects that actuarial assumptions have on the reported benefit-liability measure? Analysis of the responses produced these findings: (1) respondents appeared to be functionally fixated on the reported funding status of the PERS and did not properly consider the underlying factors that affect this status; (2) a significant percentage of respondents understood the effects of the assumed rates of (a) salary increase and (b) return on plan assets on reported pension obligations, but did not recognize the effects of the actuarial cost methods presented; (3) mean responses were not affected by the presence of 10-year trend data; however, the inclusion of 10-year data did result in improved judgment consensus; (4) fixation on the reported funding status of the fictitious PERS was not limited to those respondents that had limited actuarial knowledge, but was found in all respondent groups; and (5) demographic characteristics had only a limited effect on respondent's decision models. These findings indicate (1) that communication between PERS financial report users and preparers needs Improvement, and (2) that financial report users have difficulty incorporating actuarial Information in their judgments. Accordingly, standards setters should standardize PERS reporting practices and/or seek ways to improve PERS disclosures.Item The impact of alternative presentations of income tax expense on selected decision behavior: an empirical study(Texas Tech University, 1973-05) Moore, Charles Kennedy,Not availableItem The utility of current cost information to selected users of financial statements(Texas Tech University, 1981-08) Lilly, Martha SadlerNot availableItem User-oriented municipal footnote reporting models: ideal and practical(Texas Tech University, 1982-08) Rees, David ArdenNot available