Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings

Edward Xuejun Li

38 citations0/0 files storedThe Accounting Review

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Auditing, Earnings Management, Governance Corporate Finance and Governance Financial Reporting and XBRL

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.

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References

2001Econometric Analysis of Cross Section and Panel Data 2001Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature 2005The economic implications of corporate financial reporting 1991Disclosure, Liquidity, and the Cost of Capital 1992The investment opportunity set and corporate financing, dividend, and compensation policies 1997Disclosure level and the cost of equity capital.1983Discretionary disclosure 1993Cross-Sectional Determinants of Analyst Ratings of Corporate Disclosures

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