Resource title

The value relevance of voluntary disclosure in the annual report

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Resource description

This paper examines if the level of voluntary disclosure affects the association between current returns and future earnings. Economic theory suggests that firms might find it advantageous to provide additional pieces of information (i.e., voluntary disclosure) to investors and analysts (Verrecchia 1983). Our results indicate that more voluntary disclosure does not improve the association between current returns and future earnings; i.e. current returns do not reflect more future earnings news. This finding raises the question whether voluntary information in the annual report contains value relevant information about future earnings or if investors are simply not capable of incorporating voluntary information in the firm value estimates. Key words: Disclosure, future earnings, informativeness

Resource author

Jesper Banghøj, Thomas Plenborg

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Resource publish date

Resource language

eng

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application/pdf

Resource resource URL

http://hdl.handle.net/10398/6742

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