Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings
Year: 2013
Type: article
Abstract: ABSTRACT: Extant research on voluntary disclosure about future prospects has focused on two forward-looking disclosure mechanisms: management forecasts and conference calls. This study examines the accelerated filing of material contracts as another type of future-related disclosure that involves no forecasting. I find that firms are more likely to accelerate material contract filings when forward-looking disclosures could lack credibility or arouse litigation concerns. However, for proprietary cost considerations, firms delay contract filings when facing high (low) product market competition from incumbents (potential entrants). I also find that accelerated contract filing is incrementally associated with lower information asymmetry. Overall, while presenting a cost-benefit trade-off that is distinctly different from forward-looking disclosures, accelerated contract filing is an important alternative channel through which firms communicate future prospects to investors. Data Availability: The data used in this study are available from the public sources identified in the paper. Contact the author for any specific data requests.
Source: The Accounting Review
DOI: 10.2308/accr-50505
Author: Edward Xuejun Li
Institutions: Baruch College, City University of New York
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3123685262