Determinants and Consequences of Quantitative Critical Accounting Estimate Disclosures

• 成果类型: Article
• 署名作者: Glendening, Matthew; Mauldin, Elaine G.; Shaw, Kenneth W.
• 署名单位: University of Missouri System; University of Missouri Columbia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52368
• 发表日期: 2019
• 页码: 189-218
• 关键词: AUDIT COMMITTEE; corporate governance; institutional investors; economic consequences; voluntary disclosure; earnings management; equity incentives; INTERNAL CONTROL; AGENCY COSTS; QUALITY

摘要

The Securities and Exchange Commission (SEC) recommends that firms provide MD&A disclosures quantifying the earnings effect of reasonably likely changes in critical accounting estimates (quantitative CAE). This paper examines the determinants and consequences of quantitative CAE. We find that quantitative CAE are negatively associated with management's incentives to misreport (proxied by portfolio vega) and positively associated with audit committee accounting expertise and with audit offices with multiple quantitative CAE clients. These findings hold for the presence, initiation, number, and magnitude of quantitative CAE, and for both pension and non-pension quantitative CAE. We also find that incidences of AAERs, misstatements, and small positive earnings surprises decrease after initiation of quantitative CAE. Collectively, our findings provide insight into the use of quantitative disclosure to inform users about accounting estimation uncertainty in financial reports.