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Introduction
Over the past two decades, business reporting practices have been heavily criticized
by academics and practitioners alike. A stream of empirical accounting research has
tested the value relevance of accounting information during different periods. Early
studies found a decline in the association between returns, on the one hand, and both
earnings and book values, on the other (Francis and Schipper, 1999; Lev and Zarowin,
1999). However, other studies have found that results are largely dependent on the
methods employed (Chang, 1998). Additionally, Brown et al. (1998) found no significant
change in the relevance of earnings over time.
This study looks not at the value relevance, but rather at the valuation relevance
of information. Information has valuation relevance if it is used by analysts in the
valuation process. This concept clearly differentiates from value relevance, which is
defined by the statistical relation between information (such as earnings) and share
price. We introduce valuation relevance as a simple indicator of the usefulness of
information to users of financial reports, in this case financial analysts. In this study,
we observe the valuation relevance of a set of 70 non-financial information items
by studying the contents of a set of sell-side financial analyst reports. The term
non-financial information in this study refers to qualitative information outside of the
four financial statements and footnotes. The operationalisation of non-financial
information in this study is the index of 70 items provided in the appendix. This index
was developed by Robb et al. (2001) based on the American Institute of Certified Public
Accountants (AICPA) 1994 Jenkins Committee Report and the database related to that
study[1]. Hence, the definition of non-financial information in this study is not
exhaustive but rather limited to the items listed in the appendix. Additionally,
information may be considered non-financial even though they are dollar denominated
if that information is not included in any of the four financial statements.
The concept of valuation relevance provides an alternative way of determining
usefulness of non-financial information. Valuation relevance does not necessarily mean
that a piece of information has an impact on the market price of a security. However, it
does mean that the analyst considers it useful enough to include in the valuation
process. Valuation relevance is a behavioral definition of information usefulness,
whereas value relevance is a statistical definition of information usefulness.
The aim of this study is to assess the usefulness of non-financial information by
testing the valuation relevance of the non-financial information items recommended
in the Jenkins report. To that extent valuation relevance is used as a measure of
information usefulness. Furthermore, we examine the association between analysts
use of non-financial information and institutional and environmental factors (such as
industry, firm size, and a firms level of intangibles) in order to identify contextual
factors that affect the usefulness of non-financial information. The study contributes to
the research area on non-financial information and analysts by:
(1) investigating the valuation relevance of non-financial information;
(2) looking at both supply and demand sides of information;
(3) testing the valuation relevance of the recommendations of the Jenkins report;
and
(4) using current empirical data.
Reporting non-financial information
Theoretically, accounting information is becoming less relevant if it fails to include
some intangible values in the balance sheet. Because firms are increasingly relying on
intangibles for their future success, this accounting treatment has meant a gradually
decreasing relevance of accounting information (Wallman, 1995; Lev and Zarowin,
1999). The criticism has centered on the argument that business reports have been
lagging as opposed to leading, which is what users are looking for. In a measure to
solve this problem the AICPA Board of Directors commissioned the Jenkins Committee
in 1991 to recommend (1) the nature and extent of information that should be made
available to others by management and (2) the extent to which auditors should report
on the various elements of that information (AICPA, 1994, p. 2, Appendix IV). Having
developed and executed a study designed to better understand the information needs
of investors and creditors, the Jenkins Committee Report, published in 1994, contained
recommendations on business reporting. The report suggests that to meet the needs of
users, business reports must:
(a) Provide more information with a forward-looking perspective, including managements
plans, opportunities, risks, and measurement uncertainties. (b) Focus more on the factors that
create longer term value, including non-financial measures indicating how key processes are
performing. (c) Better align information reported externally with the information reported to
senior management to manage the business (AICPA, 1994, p. 5).
In essence, the needs of users of business reports were no longer thought to be satisfied
with conventional business reports including balance sheets, income statements,
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Earlier research has found that firms with intangible assets are more likely to provide
supplementary disclosures (Gelb, 2002). Therefore, it is hypothesized that for
companies with a high level of intangibles analysts provide a higher level of nonfinancial information in their reports. Intangibles are operationalized here as the book
value of intangibles reported in the financial statement, whereas book-to-market as
applied in H1 tries to capture a firms intangible values, which are not reported in the
balance sheet. Hence, H1 is concerned with the relationship between the provision of
information in analyst reports and the target firms level of unrecognized intangible
values, while H4 is concerned with the relationship between the provision of
information in analyst reports and the target firms level of recognized intangible
values. A problem with recognized intangible values is that US generally accepted
accounting principles (GAAP) does not allow the recognition of internally generated
intangibles to the same degree as acquired intangibles. As a result, the level of
intangibles on companies balance sheets is highly influenced by past acquisitions.
Design of the study and sample
Sample and data collection
We tested valuation relevance of information items recommended by the Jenkins report
by conducting a disclosure study of 200 sell-side analyst reports written on a respective
number of Standard &Poors (S&P) 500 companies. We subsequently compared the use
of non-financial information items in sell-side analysts reports with the disclosure of
the same items in the annual reports of target companies[2].
The sample consists of 200 randomly selected firms from the S&P 500 in 2004. The
S&P 500 represents some of the largest and most intensely scrutinized companies in
the world. Annual reports (10-k) and randomly selected analyst reports were collected
for the 200 firms. The analyst reports were randomly selected among all reports
published between the release of the firms 10-k report and the release of their first
quarterly report of the year 2005. We choose this period because our study included a
comparison between disclosures of firms 10-k reports and the content of sell-side
analyst reports. Excluded from the sample were financial firms. Annual reports were
gathered from the Securities and Exchange Commission (SEC) and analyst reports
from the Investext Plus Database. The primary source of data was hand gathered from
the 10-k reports and the reports from analysts. Complementary data were collected
from COMPUSTAT[3].
Operationalization of variables
Variables used in the present study to explain the provision of non-financial
information, in the analyst report were firm size, book-to-market ratio, industry,
intangibles, and annual report disclosure. We also controlled for the following two
variables: brokerage firm and sell-hold-buy recommendation. Firm size (net sales),
book-to-market ratio, industry and book value of intangibles were all based on
year-end figures in 2003 from the COMPUSTAT database. The brokerage firm was
the firm that issued the analyst report and sell-hold-buy recommendation was the
recommendation given in each analyst report.
Disclosure instrument
A disclosure index, which follows earlier research that studies the incidence of
disclosure information (e.g., Chow and Wong-Boren, 1987; Cooke, 1989; Adrem, 1999;
Camfferman and Cooke, 2002), was used to gauge the level of non-financial information
in analyst reports and annual reports. Each analyst and annual report was read from
cover to cover to obtain the disclosure score.
The present study used a disclosure index developed by Robb et al. (2001);
The Robb et al. index is based on the work of the AICPA (The Jenkins report).
The index was constructed of items that investors have reported as relevant
and that should be disclosed by firms. The same disclosure index was applied to
both the annual and analyst reports. The disclosure index was grouped into two main
categories, with three sub-categories within each main category. The two main
categories were:
(1) forward-looking information (36 items); and
(2) historical information (34 items) (see the appendix for a description of all items
included in the index).
A typical example of forward-looking information provided in the analyst report was
(Citigroup, 2005a): Key risks we see to Amgen achieving our valuation target include
the following: any delay in clinical development or regulatory approval of developing
products could have a material impact on the companys earnings.
A typical example of historical information provided in the analyst report was
(Citigroup, 2005b):
American Standard is a market leader in each of its segments: Heating & Cooling, Bath &
Kitchen, and Vehicle Controls. The Heating & Cooling division makes products under the
Trane and American Standard brand names. The company sells its Bath & Kitchen fixtures
through many brand names including American Standard, Ideal Standard, and Porcher.
One problem with the forward-looking and historical categorization is what items that
belong to what category. Thus, a certain amount of subjectivity is used by the authors
in the coding process. However, we follow the categorization defined by Robb et al.
(2001).
One advantage of using this index is that other researchers (e.g. Robb et al., 2001;
Vanstraelen et al., 2003) have applied the index in the past. Another advantage of this
index is that other researchers and regulating bodies have scrutinized the relevance of
the items for investors. However, one drawback with the index is that it should be seen
as a wish list for information that the firm should disclose because all items on the
index is not applicable to provide for all firms. This means that no firm will disclose all
information items included in the index.
The present study uses a method in which all items in the index are non-weighted
(e.g. Raffournier, 1995; Adrem, 1999). Criticism has been directed towards weighted
scoring approaches because of the subjectivity when setting the weight preferences.
According to Adrem (1999), a non-weighted approach is preferred in that it has fewer
measurement errors. The following formula to calculate the disclosure level for a
specific firm is employed:
Disclosure level for firmj
mj
X
i1
di
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Disclosure itemi, di, is 1 if the item is disclosed, and 0 otherwise. The total number of
items in the index is mj. The disclosure index consists of 70 items[4] with a
measurement range from 0 to 70 and is, therefore, a censored variable[5].
A limitation of content analysis in general, which holds for the application of
content analysis using a disclosure index as in this study, is the methods subjectivity.
The method relies on a researchers subjectivity in the coding process. The disclosure
index used in this study contains non-financial information items that require the
researchers to use their judgment in the coding process. A consequence of the
subjectivity of the coding process is that the results may be difficult to replicate. Hence,
comparisons of the results of this study to other studies using the same disclosure
index may have limited usefulness. The coding of the empirical data used in this study
was performed by both authors (Per Flostrand and Niklas Strom). The reliability of
the content analysis employed in this study was achieved using two coders for a
sample of the material in order to assure that the authors were consistent in their
coding. In other words, because the nature of the disclosure index requires the authors
to use their judgment in the coding process, the results are subjective. However, by
being methodologically coherent, the results of the coding process are at least
consistent across the sample. A problem, however, is the comparability across studies
since the authors of this study might code differently than authors of previous or future
studies.
Regression model
The following multivariate regression was employed to assess the effect the
explanatory variables had on the extent of non-financial information content in analyst
reports:
AnalystD a0 b1 AnnualD b2 Size b3 BM b4 Intangibles e
where, AnalystD refers to analyst report content (measured as the level of nonfinancial information content in the analyst report), AnnualD refers to annual report
disclosure (measured as the non-financial information disclosure level in the annual
report), Size refers to the log value of net sales at year-end 2003[6], BM refers to the log
value of book-to-market at year-end 2003, Intangibles refers to book value of reported
intangibles at year-end 2003, and e is the error term.
A multicollinearity test was performed which indicated that the multicollinearity
between the explanatory variables in the multivariate regression was not a problem[7].
Results
Descriptive results
When looking at items disclosed in the analyst report, we found that the average
number of items disclosed was 5.33 (out of 70) (see the appendix for descriptive
statistics). It should be noted that all 70 items of the index will not be applicable to any
one company. One such item could for example be volume and prices of materials
consumed which would be non-applicable for a consultancy firm. The index should be
seen as a wish-list where all 70 items will never be relevant for one firm. Accordingly,
while the index does include 70 items an average score of 5.33 does not mean that 64.67
relevant information items were not disclosed. Evaluating whether an average score of
5.33 items is a high or low number is not the purpose of this study. However, the low
average score does raise concerns that the index might not fully capture what it intends
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The pairwise results showed that in 39 per cent of the instances when an item is
provided in the analyst report it is also disclosed in the annual report. These results
indicate that analysts rely on additional information sources beyond annual reports,
accounting for a majority of their information needs. However, on an item level,
the results of the pairwise tests revealed that some items used in analyst reports
had a high frequency of occurrence in annual reports. For example, the item Mission,
broad objectives and strategy to achieve broad objectives was disclosed in both reports
with a score of 100 per cent. The item Description of business and industry structure
had a score of 71 per cent and Description of principal products/services had a score of
76 per cent. Forecasts, however, with a score of 36 per cent, is an example of an item
that is commonly provided in the analyst report but rarely disclosed in the annual
report.
Correlation analysis
The correlations between the dependent (analyst report content) and independent
variables (annual report disclosure, book-to-market, and firm size) are presented in
Table I. The correlation analysis revealed that firm size was significantly related to
analyst report content, annual report disclosure, book-to-market, and intangibles.
The implication of this finding is that larger firms have higher analyst report
information content, a higher degree of annual report disclosure, a higher book-tomarket ratio, and higher levels of intangibles. This finding is not surprising as earlier
studies reported a positive association between firm size and non-financial disclosure
(e.g. Arvidsson, 2003; Robb et al., 2001; Vanstraelen et al., 2003). Larger firms also had a
higher book value of intangibles. Moreover, the results from the correlation analysis
showed that firms with high annual report disclosure had a higher book value of
intangibles, indicating that firms with a high degree of intangibles supply more
non-financial information in the annual report to inform investors about their
value-creating processes.
Analyst
report
content
Analyst report content
Annual report disclosure
Book-to-market
Firm size
Intangibles
Table I.
Pearson correlation
analysis
Correlation
Significance
Correlation
Significance
Correlation
Significance
Correlation
Significance
Correlation
Significance
Annual
report
disclosure
Book-tomarket
Firm
size
Intangibles
1
0.119*
0.047
0.006
0.466
0.148*
0.018
0.029
0.349
1
0.082
0.125
0.194**
0.003
0.183**
0.006
1
0.421**
0.000
0.295**
0.000
1
0.556**
0.000
Independent variable
Annual report disclosure
Firm size
Book-to-market
Intangibles
Sign
prediction
t-value
Significance
( p-value)
+
+
+
+
200
200
200
186
1.687*
2.109**
0.085
0.390
0.093
0.036
0.932
0.697
Notes: The dependent variable is analyst report content. Annual report disclosure is
operationalized as the extent of non-financial information disclosed in the annual report. Firm size
is operationalized as log of net sales of analyzed firms. Book-to-market is operationalized as log
of book-to-market ratio. Intangibles are operationalized as log of book value of intangibles.
*Significant at the 0.10 level; **significant at the 0.05 level
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Table II.
Results of the univariate
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between firm size and forward-looking information, only annual reports showed a
significantly positive relation between firm size and historical information. For annual
reports, total annual report disclosure (untabulated results, p 0.04), forward-looking
annual report disclosure (untabulated results, p 0.08), and historical annual report
disclosure (untabulated results, p 0.05) were positively and significantly related to
firm size.
H3 on industry differences was only partly supported by the data. Industry
differences were tested using global industry classification standards (GICS). The GICS
system consists of ten sectors, 24 industry groups, 64 industries, and 139 subindustries. For the purposes of this study, we relied on the sector-level GICS
classification in that any further classification into industry groups, industries, or subindustries would be unsuitable for our sample size. The ANOVAs showed mixed
results regarding industry differences in analyst disclosures of non-financial
information as hypothesized in H3 for disclosure score per industry. Whereas no
significant difference was obtained across industries for total disclosure (ANOVA,
p 0.161), there were some significant univariate differences, indicating that the
industrial industry had higher levels of non-financial analyst disclosures than
energy, consumer discretionary, and IT industries. We have no theory to account
for why the industrial industry should have higher disclosures than, for example, the
IT industry, which is generally considered an industry with high levels of intangibles.
However, robustness checks controlling for firm size indicated that size of a firm
seemed to drive the industry differences reported for non-financial content as
significant differences between the industries were reported. Therefore, we can not
conclude that industry as such explains differences in non-financial content in analyst
reports.
Level of intangibles was hypothesized (H4) to be positively related to the level
of analyst disclosure. The results, however, did not support the hypothesis in that
no significant association was observed between log of intangibles in the balance
sheet and level of non-financial content in analyst reports. Using log of intangibles
on the balance sheet as an explanatory variable showed that, whereas annual report
total and forward-looking non-financial disclosures were significantly and positively
related to log of intangibles, there was no significant relation between log of
intangibles in the target firm and the level of non-financial information by analysts. In
other words, companies with more intangibles on their balance sheets tend to disclose
more non-financial information, but analyst disclosures are not significantly affected
by it.
Buy-sell-hold recommendation was not associated with the non-financial
information content in analyst reports. Thus, it cannot be concluded that analyst
reports with specific recommendations contain more information on non-financial
information (untabulated results, p 0.292). Brokerage firm, however, was associated
with the level of non-financial information content in analyst reports. A significant
difference (untabulated results, p 0.068) on the level of non-financial information
provided in the analyst report between brokerage firms was detected, indicating that
some brokerage firms use non-financial information more than others.
Multivariate regression results
The multivariate regression explored whether analyst report content was associated
with annual report disclosure. Moreover, H1, H2, and H4 were tested in the
Independent variable
Annual disclosure score
Log book-to-market
Log intangibles
Firm size (log net sales)
Adjusted-R2
Standard error
F-value
0.028
2.629
2.354
Coefficient
t-value
Significance
( p-value)
0.069
0.405
0.354
1.038
1.743*
0.694
1.101
2.259**
0.083
0.489
0.272
0.025
0.056
multivariate regression. Table III summarizes the results from the multivariate
regression analysis.
The results of the multivariate regression were consistent with those of the
univariate regressions. The findings showed that analyst report content was
significantly and positively related to annual report disclosures and firm size, i.e. the
explanatory factors of non-financial information content in the analyst report were
firm size of the analyzed firm and the level of non-financial disclosure in the annual
report. H2 was, therefore, supported by the multivariate analysis. Book-to-market was
unrelated to analyst report content and no relation was found between analyst report
content and intangibles.
Conclusion and discussion
This study introduces the concept of valuation relevance as a criterion in assessing
information usefulness. In a world where standard setters and others are striving
to improve the usefulness of financial reports and where the value relevance concept is
at best a noisy and crude criterion for information usefulness, we offer valuation
relevance as an alternative and more intuitive measure of information usefulness.
Valuation relevance is easily observable and does not suffer the methodological
problems associated with value relevance. In contrast to value relevance, which rests
on a statistical relation between information and value, valuation relevance has a
qualitative relation with information usefulness. When the information needs of users
of financial statements are changing from quantitative to qualitative and financial to
non-financial, valuation relevance offers standard setters, preparers of financial
reports, and others an intuitive and accessible way of measuring information
usefulness.
In the present study, we used the valuation relevance criterion to assess the
usefulness of a specific set of information items as specified in the Jenkins report
(AICPA, 1994). While the content analysis method used in this study offers a practical
and direct way of studying the work and information usage of analysts, it also has
weaknesses. One limitation of the method employed in this study is the subjectivity
inherent in the coding process, which impedes replicability and comparisons with other
studies. Additionally, low disclosure scores of the content analysis inevitably raise
concerns over the quality of the disclosure index employed.
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Table III.
Multivariate regression
statistics on analyst
report content
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The results of the study clearly showed that analysts included this type of
non-financial information in their reports. Hence, this type of information can,
in general, be characterized as valuation relevant. However, out of 70 information items
in the disclosure index the analyst reports contained on average 5.33 information
items. This indicates that the information items in the index are either contextual
in that only a few apply to each firm, or that analysts do not find them valuation
relevant. The fact that annual reports in the sample contained on average 15.14
items from the index suggests both that the items are contextual and that out of the
average 15.14 items disclosed by companies analysts only found 5.33 valuation
relevant.
A few non-financial items that were particularly prevalent in analyst reports were,
for example, forecasts (disclosed in 90 per cent of all analyst reports) and beneficial or
detrimental circumstances in which a company faces and that may cause an increase or
decrease in cash flows in the future (disclosed in 68 per cent of all analyst reports).
However, it is plausible that these disclosures are influenced by the management
discussion and analysis (MD&A) disclosure requirements in the annual report
according to the more recent recommendations of the SEC. Such a disclosure is, for
instance analysis of financial condition and operating performance including both
past and prospective performance[12]. An implication of the findings in this paper
for policy makers is whether the disclosure of specific valuation relevant non-financial
information should be voluntary or mandated. More research is warranted to further
investigate this issue.
Our findings additionally showed that non-financial information content in
analysts reports was significantly related to both annual report disclosure and firm
size. This finding indicates that analysts are affected by the information environment
of the target firm and emphasizes the analysts strong dependency on access to
relevant information. Following our results, the provision by firms and access of
analysts to relevant non-financial information might not be a problem with large firms
in rich information environments, but may be more problematic in smaller firms. The
sample in our study consists of some of the larger firms in the world; despite this, there
was still a positive relation between size of the firm and level of information disclosed
in analyst reports.
Further research is needed on the demand side for non-financial information.
Particularly fruitful would be to investigate to what extent analysts and investors
are restricted in their access to valuation relevant information, as our results indicated
that there was such a constraint regarding non-financial information. This could, for
example, be conducted by interviewing financial analysts. It would also be interesting
to see similar studies of smaller firms and whether the information environment is rich
enough for analysts to discover relevant non-financial information in their analyses of
such firms.
Notes
1. The AICPA study Database of Materials on Users Needs for Information and
Improving Business Reporting A Customer Focus is also known as the Jenkins
report.
2. Analyst reports refer to reports written by financial analysts on behalf of banks and
brokerage firms. Analyst reports generally contain a valuation of the target firm and
conclude with a target price for the security. An annual report in this paper refers to
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
the 10-k report US firms are obliged to register with the SEC. Such 10-k reports contain
financial and non-financial information deemed useful to investors.
COMPUSTAT is a database containing fundamental company and market data.
The items in the index are a specification of the Jenkins report. For further information
on each item in the index, see AICPA (1994).
Because the dependent variable is censored, an additional statistical test was
performed. Similar results were reported when using the log value of disclosure score
as the dependent variable in the regression.
Because of normality problems, the log value is used for the size variable in the
regression. This is a standard procedure on size variables (e.g. net sales or total assets)
in regression analysis.
VIF (variance inflation factor) statistics was well below the level of 10, which is the
level when multicollinearity is regarded as a problem (Hair et al., 1998).
A forward-looking mean of 3.54 and a historical mean of 1.79 were reported.
Vanstralen et al. (2003) used a maximum score of 65 items in their disclosure index.
Their index was also based on Robb et al. (2001), but had fewer items than the present
study.
Unlike H4, which uses the recorded amount of IC on firms balance sheets.
As a check of robustness, we also operationalized firm size as total assets and market
capitalization. The results were similar regardless how firm size was operationalized.
Additionally, we operationalized firm size as number of pages in the analyst reports or
the annual reports. A significant relation was observed between the length of the
analyst reports and their level of non-financial information content, a relation that is
prevalent in annual reports as well.
See www.sec.gov/rules/interp/33-8350.htm (17 June 2006).
References
Adrem, A.H. (1999), Essays on Disclosure Practices in Sweden: Causes and Effects, Lund
University Press, Lund.
AICPA (1994), Improving Business Reporting A Customer Focus: Meeting the Information
Needs of Investors and Creditors; and Comprehensive Report of the Special Committee on
Financial Reporting, American Institute of Certified Public Accountants, New York.
Arvidsson, S. (2003), Demand and Supply of Information on Intangibles: The Case of KnowledgeIntense Companies, Lund Business Press, Lund.
Beattie, V., McInnes, B. and Fearnley, S. (2004), A methodology for analysing and evaluating
narratives in annual reports: a comprehensive descriptive profile and metrics for
disclosure quality attributes, Accounting Forum, Vol. 28, pp. 205-36.
Brown, S., Lo, K. and Lys, T. (1998), Use of R2 in accounting research: measuring changes in
value relevance over the last four decades, Journal of Accounting and Economics, Vol. 28,
pp. 83-115.
Bukh, P.N., Nielsen, C., Gormsen, P. and Mouritsen, J. (2005), Disclosure of information on
intellectual capital in Danish IPO prospectuses, Accounting, Auditing and Accountability
Journal, Vol. 18, pp. 713-32.
Camfferman, K. and Cooke, T.E. (2002), An analysis of disclosure in the annual reports of UK
and Dutch companies, Journal of International Accounting Research, Vol. 1, pp. 3-30.
Chang, J. (1998), The decline in value relevance of earnings and book values, working paper,
Harvard University, Cambridge, MA.
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information
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Strom, N. (2006), IPO pricing does prospectus disclosure matter?, working paper, Uppsala
University.
Vanstraelen, A., Zarzeski, M.T. and Robb, S.W.G. (2003), Corporate nonfinancial disclosure
practices and financial analyst forecast ability across three European countries, Journal of
International Financial Management and Accounting, Vol. 14, pp. 249-78.
Wallman, S.M.H. (1995), The future of accounting and disclosure in an evolving world: the need
for a dramatic change, Accounting Horizons, Vol. 9, pp. 81-91.
Further reading
Eccles, R.G., Herz, R.H., Keegan, E.M. and Phillips, D.M. (2001), The ValueReporting Revolution:
Moving Beyond the Earnings Game, John Wiley & Sons, New York.
Lang, M.H. and Lundholm, R.J. (1993), Cross-sectional determinants of analyst ratings of
corporate disclosures, Journal of Accounting Research, Vol. 31, pp. 246-71.
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Appendix
Minimum
Maximum
Mean
Standard deviation
200
200
1
2
15
29
5.33
15.14
2.633
5.004
Table AI.
Analyst report score
Annual report score
Descriptive statistics of
disclosure index data
Analyst
report (%)
Annual
report (%)
2.00
3.00
6.00
7.00
15.00
28.00
5.00
17.00
20.50
26.00
7.00
1.50
14.50
31.00
9.50
19.00
11.50
10.50
24.50
31.00
0.50
13.00
6.00
29.00
4.00
2.00
Enabling infrastructures
Organizational structure
Business strategy
Management philosophy
Employee incentives
Financial information by management responsibility
Goals for return on assets, equity, and capitalization ratio
Identity and background of directors and management
Identity and description of management incentive plans
1.50
3.00
0.50
1.00
0.00
3.00
2.00
2.50
8.00
29.00
12.00
37.50
0.00
8.50
58.50
38.00
(Continued)
Table AII.
Disclosure index and
percentage disclosed
MRN
29,9
596
Table AII.
Analyst
report (%)
Annual
report (%)
0.00
0.00
0.00
1.50
2.50
6.50
3.00
60.00
24.00
81.00
0.00
0.00
0.50
1.00
0.00
0.00
67.50
63.50
14.50
17.50
11.00
0.50
35.00
0.00
89.50
4.00
20.00
39.50
6.00
75.00
62.50
0.00
15.00
6.00
4.50
1.00
10.50
92.00
0.50
68.00
80.00
22.50
18.00
18.00
1.50
1.50
2.00
1.00
17.00
14.00
1.50
9.50
4.50
1.00
0.50
2.50
0.50
87.50
6.50
5.00
0.00
41.50
0.00
0.00
0.00
6.50
(Continued)
Analyst
report (%)
Annual
report (%)
7.00
1.50
0.00
40.00
0.50
0.00
1.00
7.00
1.00
0.00
10.00
24.50
4.50
5.50
6.00
33.50
2.00
6.00
6.00
43.50
3.50
11.00
3.00
20.00
0.50
5.00
1.00
2.50
1.00
18.00
5.50
1.00
Valuation
relevance of
information
597
Table AII.