Externalities of Accounting Disclosures: Evidence from the Federal Reserve

• 成果类型: Article
• 署名作者: Li, Edward X.; Lind, Gary; Ramesh, K.; Shen, Min
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY); Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh; Rice University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2022-0105
• 发表日期: 2023
• 页码: 401-427
• 关键词: information-content; Aggregate earnings; monetary-policy; beige book; determinants; origins; MARKET; FIRMS

摘要

This study provides the first empirical evidence that the Federal Reserve (the Fed) systematically retrieves micro-level accounting reports to aid its understanding of the state of the macroeconomy. Using unique data identifying its direct access of corporate SEC filings, we show that the Fed tracks firms that are bellwethers and industry leaders, or that can engender systemic risk. The qualitative information in the Fed-accessed periodic reports explains the Fed's GDP growth forecasts for up to four quarters, after controlling for contemporaneous aggregate earnings and other economic information. However, professional forecasts fail to incorporate such qualitative accounting information. In addition, this qualitative information is reflected in the tone of the ensuing FOMC meeting discussions as well as in Fed forecasts of key macro demand and supply factors. Overall, our evidence suggests important externalities of micro-level accounting reports, especially qualitative disclosures, on the central bank's macroeconomic forecasts and, by extension, monetary policy.