Large-Sample Evidence on Firms' Year-over-Year MD&A Modifications

• 成果类型: Article
• 署名作者: Brown, Stephen V.; Tucker, Jennifer Wu
• 署名单位: State University System of Florida; University of Florida
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2010.00396.x
• 发表日期: 2011
• 页码: 309-346
• 关键词: information-content; earnings; management; DISCLOSURES; statements

摘要

The Securities and Exchange Commission (SEC) has expressed concern about the informativeness of firms' Management Discussion and Analysis (MD&A) disclosures. A firm's MD&A is potentially uninformative if it does not change appreciably from the previous year after significant economic changes at the firm. We introduce a measure for narrative disclosure-the degree to which the MD&A differs from the previous disclosure-and provide three findings on the usefulness of MD&A disclosure. First, firms with larger economic changes modify the MD&A more than those with smaller economic changes. Second, the magnitude of stock price responses to 10-K filings is positively associated with the MD&A modification score, but analyst earnings forecast revisions are unassociated with the score, suggesting that investors-but not analysts-use MD&A information. Finally, MD&A modification scores have declined in the past decade even as MD&A disclosures have become longer; the price reaction to MD&A modification scores has also weakened, suggesting a decline in MD&A usefulness.