Manager Reporting and Disclosure Decisions: A Look at Empirical Research
1.Introduction
Financial reporting and disclosure are key ways managers can inform investors of the performance and governance of the firm. According to Healy et al. (2001), capital markets need corporate disclosures for them to function efficiently. "Firms provide disclosure through regulated financial reports, including the financial statements, footnotes, management discussion and analysis, and other regulatory filings" (Healy et al, pg. 406, 2001). In addition to mandatory disclosures, managers also have the option to engage voluntary disclosures, which consist of such things as management forecasts, analyst's presentations and conference calls, press releases, Internet sites, and other corporate reports.
As discussed above, manager's options for disclosing come in the form of either mandatory or voluntary disclosures. Consistent with the literature on managerial disclosure decisions my discussion in section two has been broken into two areas, focusing on positive accounting theory, and voluntary disclosures. Positive accounting theory deals more with the mandatory financial disclosures and looks at the financial reporting choices of managers that affect the financial reports. Whereas empirical evidence on motivation for managers to voluntarily disclose looks more at the stock market implications of disclosure, examining six theories for why managers disclose voluntarily.
This paper will focus on evaluating the current literature and empirical evidence on managerial reporting and disclosure decisions. In addition, it will address the implied questions on manager disclosure decis ...