Managers' choice of disclosure complexity

• 成果类型: Article
• 署名作者: Bertomeu, Jeremy
• 署名单位: Washington University (WUSTL); Washington University (WUSTL)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101637
• 发表日期: 2023
• 关键词: voluntary disclosure; earnings; QUALITY

摘要

Aghamolla and Smith (2023) make a significant contribution to enhancing our under-standing of how managers choose financial reporting complexity. I outline the key as-sumptions and implications of the theory, and discuss two empirical implications: (1) a U-shaped relationship between complexity and returns, and (2) a negative association between complexity and investor sophistication. However, the robust equilibrium also implies a counterfactual positive market response to complexity. I develop a simplified approach in which simple disclosures indicate positive surprises, and show that this im-plies greater investor skepticism toward complexity and a positive association between investor sophistication and complexity. More work is needed to understand complexity as an interaction of reporting and economic transactions, rather than solely as a reporting phenomenon.(c) 2023 Elsevier B.V. All rights reserved.