Voluntary Disclosure and Equity Offerings: Reducing Information Asymmetry or Hyping the Stock?

The study aims to propose a multi-theoretical framework based on information asymmetry and institutional theories by focusing on the OFR regulation changing period from 2004-2006. We carry out an empirical investigation to detect the extent of forward-looking information for a sample of 690 UK non-financial firm-year observations which are drawn from the top 500 UK. We show that the extent of voluntary disclosure of Forward Looking (FL) information is positively and significantly associated with growth opportunities, leadership, audit committee, competition rate, corporate size, and cross-listing. However, the extent of FL information is negatively and significantly associated with blockholders. This paper applies a multi-theoretical lens based on information asymmetry and institutional theories are employed in order to identify potential new determinants of voluntary disclosure in regards to forward-looking information in the UK context.

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Signaling Under Threat: Evidence of Voluntary Disclosure in Contested Takeovers

Journal of Accounting Auditing & Finance ◽

10.1177/0148558x20967814 ◽

2020 ◽

pp. 0148558X2096781

Author(s):

Gerald J. Lobo ◽

Kangzhen Xie ◽

Claire J. Yan

Keyword(s):

Propensity Score ◽

Information Asymmetry ◽

Propensity Score Matching ◽

Voluntary Disclosure ◽

Bargaining Power ◽

Economic Consequences ◽

Good News ◽

Earnings Guidance ◽

Difference In Differences ◽

Target Management

We investigate voluntary disclosure strategies in contested takeovers and the associated economic consequences. Using a difference-in-differences research design and propensity score matching, we find that, relative to friendly takeovers, target management in contested takeovers provides more earnings guidance and conveys more good news during the takeover. Moreover, voluntary disclosure helps contested targets negotiate a better offer, and the results are stronger for targets with more information asymmetry. Collectively, targets adopt voluntary disclosure and alter their strategies under the threat of contested takeover to enhance their bargaining power. Voluntary disclosure by contested targets serves as a negotiation tactic that potentially benefits target shareholders.

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Voluntary disclosures and market response to earnings announcements

Review of Accounting and Finance ◽

10.1108/raf-06-2016-0087 ◽

2018 ◽

Vol 17 (1) ◽

pp. 2-17 ◽

Cited By ~ 1

Author(s):

Guy Dinesh Fernando ◽

Justin Giboney ◽

Richard A. Schneible

Keyword(s):

Information Asymmetry ◽

Stock Returns ◽

Information Content ◽

Voluntary Disclosure ◽

Stock Price ◽

Trading Volume ◽

Voluntary Disclosures ◽

Release Date ◽

Price Movement ◽

Content Type

Purpose The aim of this paper is to investigate the impact of voluntary disclosure on information asymmetry between investors and the average information content of subsequent the earnings announcement. Design/methodology/approach The authors use empirical methodology relying on multiple regression analyses. The authors estimate models of trading volume and stock returns around the earnings’ release date as a function of voluntary disclosures, measured using information in the 8-K statements. Findings Voluntary disclosures prior to the earnings release date increase trading volume related to stock returns. In addition, voluntary disclosures also reduce stock price movement around that date. Research limitations/implications The results indicate that voluntary disclosures increase trading volume related to stock returns around the earnings release date. Such increases indicate increased differential precision among investors, demonstrating that voluntary disclosures increase differences in opinion among investors. The reduced stock price movement around the earnings release date also show that voluntary disclosures reduce the information content of earnings. One limitation is that the measure of voluntary disclosures does not consider the variation in the information content of individual disclosures. Practical implications Firms who make voluntary disclosures will need to carefully consider how to structure such releases to minimize asymmetry between investors. Investors should pay greater attention to finding out, and interpreting, voluntary disclosures by firms. Social implications Regulators have previously expressed concern about leveling the playing field between more and less informed investors. The results showing increased differences in information as a result of voluntary disclosures provide valuable insights as regulators debate the balance of mandated and voluntary disclosure. Originality/value This is the first study to investigate the effect of voluntary disclosures on information asymmetry among investors using trading volume and, consequently, the first to find increased differences among investors that result from those voluntary disclosures. The paper is also the first to use a direct measure of voluntary disclosure developed by Cooper et al. to demonstrate the negative relation between voluntary disclosure and the average informativeness of earnings announcements.

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