Regulation FD and the Financial Information Environment

2001 ◽  
Author(s):  
Frank Heflin ◽  
K.R. Subramanyam ◽  
Yuan Zhang
Keyword(s):  
Information Environment ◽  
Financial Information ◽  
Regulation Fd

Regulation FD and the Financial Information Environment: Early Evidence

2003 ◽  
Vol 78 (1) ◽  
pp. 1-37 ◽  
Author(s):  
Frank Heflin ◽  
K. R. Subramanyam ◽  
Yuan Zhang
Keyword(s):  
Stock Prices ◽  
Earnings Announcements ◽  
Relevant Information ◽  
Financial Information ◽  
Earnings Forecast ◽  
Forecast Errors ◽  
Informational Efficiency ◽  
The Public ◽  
Fair Disclosure ◽  
Regulation Fd

On October 23, 2000, the SEC implemented Regulation FD (Fair Disclosure), which prohibits firms from privately disclosing value-relevant information to select securities markets professionals without simultaneously disclosing the same information to the public. We examine whether Regulation FD's prohibition of selective disclosure impairs the flow of financial information to the capital markets prior to earnings announcements. After implementation of FD, we find (1) improved informational efficiency of stock prices prior to earnings announcements, as evidenced by smaller deviations between pre-and post-announcement stock prices; (2) no reliable evidence of change in analysts' earnings forecast errors or dispersion; and (3) a substantial increase in the volume of firms' voluntary, forward-looking, earnings-related disclosures. Overall, we find no evidence Regulation FD impaired the information available to investors prior to earnings announcements, and some of our evidence is consistent with improvement.

The Effect of First Wave Mandatory XBRL Reporting across the Financial Information Environment

2012 ◽  
Vol 26 (1) ◽  
pp. 127-153 ◽  
Author(s):  
Joung W. Kim ◽  
Jee-Hae Lim ◽  
Won Gyun No
Keyword(s):  
Stock Returns ◽  
The Body ◽  
Information Environment ◽  
Financial Information ◽  
Data Availability ◽  
Market Condition ◽  
Matched Pair ◽  
Uncertain Information ◽  
Information Risk ◽  
Earnings Releases

ABSTRACT This study examines the effect of mandatory XBRL disclosure across various aspects of the financial information environment. Our findings show an increase in information efficiency, a decrease in event return volatility, and a reduction of change in stock returns volatility for 428 firms (1,536 10-K and 10-Q filings) post-XBRL disclosure. In addition, this study shows that XBRL mitigates information risk in the market, especially when there is increased uncertainty in the information environment. Our results are robust to various alternative specifications and research modifications, such as a matched-pair control (326 XBRL versus 326 non-XBRL firms), current stock market condition, potential earnings releases, and corporate governance. This study contributes to the literature by systematically documenting evidence of how mandatory XBRL disclosure decreases information risk and information asymmetry in both general and uncertain information environments. Our evidence could potentially assist the SEC in their effort to expeditiously assess the benefits of XBRL. Data Availability: The list of firms used in the study is available from Professor Lim upon request. All other data are available from sources identified in the body of the paper.

CFO Effort and Public Firms’ Financial Information Environment

2020 ◽  
Author(s):  
Lee E. Biggerstaff ◽  
David C. Cicero ◽  
Brad Goldie ◽  
Lauren C. Reid
Keyword(s):  
Information Environment ◽  
Financial Information ◽  
Public Firms

scholarly journals Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections

2021 ◽  
Vol 14 (6) ◽  
pp. 273
Author(s):  
Omid Mehri Namakavarani ◽  
Abbas Ali Daryaei ◽  
Davood Askarany ◽  
Saeed Askary
Keyword(s):  
Audit Committee ◽  
Information Quality ◽  
Stock Exchange ◽  
Entropy Method ◽  
Information Environment ◽  
Financial Information ◽  
Financial Knowledge ◽  
Political Connections ◽  
Internal Information

This study explores the relationship between audit committee characteristics and accounting information quality by justifying the role of the internal information environment and political connections under the theocracy state of Iran with syncretic politics. Using panel data of 558 firms from the Tehran Stock Exchange (TSE) for 2011–2016, we rank firms using Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) and entropy method for determination of the weight of evaluating indicators. The firms are positioned into high- to low-level political connections, and two proxies for audit committee characteristics are used: independence of audit committee and financial knowledge. Furthermore, three proxies are used for an internal information environment: earning announcement speed, the accuracy of earning forecasting and lack of financial restatements. Our findings show that there is a significant and positive relationship between the audit committee and financial information quality characteristics in high-level political connections, as well as between financial knowledge and financial information quality. Furthermore, the findings of this study suggest that the application of political economy theories could be appropriate for more inquiry.

scholarly journals The impact of disclosure reform on the NZX's financial information environment

2009 ◽  
Vol 17 (4) ◽  
pp. 460-478 ◽  
Author(s):  
Meng Huang ◽  
Alastair Marsden ◽  
Russell Poskitt
Keyword(s):  
Information Environment ◽  
Financial Information ◽  
The Impact

scholarly journals The Impact of Financial Information Comparability on Aggressive Tax Avoidance with Respect to the Information Environment

2020 ◽  
Vol 15 (3) ◽  
pp. 134-151
Author(s):  
Zahra Farhadi
Keyword(s):  
Financial Reporting ◽  
Confidence Level ◽  
Tax Avoidance ◽  
Generalized Least Squares ◽  
Financial Statements ◽  
Information Environment ◽  
Financial Information ◽  
Least Squares Regression ◽  
Aggressive Tax Avoidance ◽  
The Impact

The overall tax avoidance perspective suggests that managers who seek opportunities to avoid paying taxes are pursuing financial abuse by creating a lack of transparency in the financial reporting environment. It seems that many companies are involved in tax avoidance. For this reason, it is crucial to determine the factors influencing the rate of tax avoidance. In this study, it is assumed that, in weak information environments, there is much incentive to avoid paying taxes. Thus, in this research, the effect of financial information comparability on aggressive tax avoidance with respect to the information environment has been investigated. To this end, 88 companies were examined during the period from 2011 to 2016. The required financial information was extracted by referring to the financial statements using Rahavard Novin software; summarized, classified and calculated in Excel software; and finally, analyzed through EViews software. By using the combined data and taking advantage of the generalized least squares regression test, it was established that the impact of financial statement comparability on aggressive tax avoidance in companies with a weaker information environment was more significant at a 90% confidence level. On the other hand, in a situation where there is a weak information environment, the ability to compare financial statements plays a significant role in reducing tax avoidance. Thus, it can reduce companies’ involvement in avoiding daring taxes, especially in a weak information environment. Furthermore, no reliable evidence was found concerning the effectiveness of financial information comparability in aggressive tax avoidance at a 95% confidence level.

Corporate social responsibility disclosure and financial information environment

Accounting ◽  
2021 ◽  
pp. 41-48 ◽  
Author(s):  
Nasr Taha Hassan
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Audit Fees ◽  
Business Environment ◽  
Information Environment ◽  
Financial Information ◽  
Annual Reports ◽  
Csr Disclosure ◽  
Corporate Social

This study aims to explore whether or not social responsibility disclosure contributes to improve the financial information environment, through examining the impact of quantity and quality of corporate social responsibility (CSR) disclosure on the accuracy of analysts' forecasts and audit fees. Content analysis technique has been used to measure quantity and quality of CSR disclosure in annual reports of Saudi registered companies. OLS regression model is used to examine the relationship between the quantity and quality of CSR disclosure in the annual reports and the quality of the analysts' forecasts, and the audit fees. The results indicated that CSR disclosure provides useful information for outsiders, where it is associated with more accurate analysts’ expectations and reduced audit fees. These results suggest that CSR disclosure is associated with high quality financial information environment. This paper provides comprehensive analysis for financial information environment in Saudi companies. The findings of paper provide useful insights concerning the importance of social responsibility disclosure in Saudi business environment.

The Association between Extensions in XBRL Disclosures and Financial Information Environment

2015 ◽  
Vol 29 (3) ◽  
pp. 73-99 ◽  
Author(s):  
Shiyou Li ◽  
Emeka T. Nwaeze
Keyword(s):  
Financial Reporting ◽  
Financial Analysis ◽  
Relevant Information ◽  
Securities And Exchange Commission ◽  
Information Environment ◽  
Financial Information ◽  
New Concepts ◽  
Financial Disclosures ◽  
Definition Of ◽  
The U.S

ABSTRACT This study examines the association between XBRL extensions and financial information environments of firms, where “financial information environment” refers to the degree to which a firm's financial information is reflected in the information held/used by investors. An XBRL extension is a customized definition of a financial concept or reporting situation that is not available in the U.S. GAAP Financial Reporting Taxonomy. In 2009, the U.S. Securities and Exchange Commission (SEC) allowed firms to begin to use extensions to add new concepts in their financial disclosures. Critics express concerns that the reporting discretion permitted under the XBRL mandate will reduce comparability of financial disclosures and complicate financial analysis. Proponents contend that XBRL extensions will provide users with new and relevant information. To evaluate the competing views, we employ several proxies for financial information environment and perform analyses for early and later phases of XBRL adoption. We find that XBRL extensions are negatively (positively) associated with financial information environments of firms at the early (later) phases of XBRL adoption. The results for later periods of XBRL adoption provide support for the SEC's policy that allows registrants to use XBRL extensions to increase users' understanding of the information in financial statements.

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