published_or_final_version / Business / Doctoral / Doctor of Philosophy

I investigate why the majority of firms do not issue earnings warnings in the face of upcoming earnings disappointments. SEC Rule 10b-5 imposes a duty on managers to correct or update when they discover that prior disclosures are misleading. I posit that managers assess the 10b-5 duty to disclose based on private information about optimism and misstatements embedded in their prior disclosures. Specifically, I hypothesize that managers who did not issue forecasts or managers who previously issued non-optimistic forecasts are more likely to be silent about upcoming earnings disappointments than managers who previously issued optimistic forecasts. I also hypothesize that managers who perceive that prior disclosures include misstatements that are difficult to verify in the court are more likely to remain silent than are managers who perceive that prior disclosures include misstatements that are easy to verify in the court. My results support these hypotheses. In additional tests, after controlling for the endogeneity between warnings and the likelihood of litigation, I find that earnings warnings issued by managers who perceive that they are not bound by a duty to disclose increase litigation risk. I also find that warnings by firms with misstatements containing less verifiable information do not reduce settlement costs when these firms are sued. Overall, my evidence indicates that when managers perceive that they have no duty to disclose, their earnings warnings are likely to have an adverse impact on litigation risk and, thus, managers are likely to remain silent to avoid this outcome. / published_or_final_version / Business / Doctoral / Doctor of Philosophy

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This study investigates voluntary disclosure practices in Canadian public companies and how they are affected by the costs and benefits of disclosure, the firm's disclosure position (Gibbins, Richardson and Waterhouse, 1990), and situational factors including earnings performance and changes in corporate strategy. Specifically the study looks at the effect of these variables on the volume and content of disclosure. It also investigates the determinants of disclosure position which are hypothesized to include managerial disclosure beliefs about the costs and benefits of disclosure, and certain organizational variables previously identified in the literature. / L'étude porte sur la publication volontaire d'informations par les sociétés ouvertes canadiennes et sur la façon dont les pratiques en la matière sont influencées par les coûts et les avantages de la publication d'information, par la propension à informer («disclosure position») de l'entreprise (Gibbins, Richardson and Waterhouse, 1990), par des éléments objectifs de sa situation (résultats financiers et modifications de la stratégie), et par les convictions de la direction. Plus précisément, l'étude porte sur les effets de ces variables sur le volume et la nature de l'information volontaire. Elle examine également les facteurs déterminant de la propension à informer en termes d'opinion de la direction sur la publication d'informations et de certaines variables organisationnelles mises de l'avant dans la littérature.

Regulators and the general public frequently advocate for higher-quality disclosure policies to reduce information asymmetry. Research and anecdotal evidence documents sizable benefits to firms that maintain high quality disclosure. This thesis explores the costs and benefits of changing disclosure quality from the perspective of the financial analysts, a sophisticated user group. This thesis presents a comprehensive view of analysts’ evaluations of disclosure quality. I investigate capital market reaction when firms experience a sustained decrease in analyst disclosure ratings. The results demonstrate that firms with deteriorating disclosure experience negative consequences, consistent with increasing information asymmetry. However, the magnitude is not as large as expected given the benefits enjoyed when disclosure quality improves. Given that firms that allow their disclosure quality to decline give up benefits they previously enjoy, I investigate why they allow this decline to occur. The deterioration is negatively associated with the interaction between capital demand and expected earnings performance implying that when firms require capital, but are expecting poor future earnings, they are more likely to permit a deterioration to occur. Declines are also associated with the occurrence of various disruptive events that imply greater uncertainty about the firm. These firms have a strong demand for external capital which they satisfy by accessing private and public debt markets. Overall, firms that experience disclosure ratings declines are not a mirror image of firms that experience ratings increases. Finally, I investigate the association between the disclosure ratings and quantitative disclosure characteristics. The results indicate significant associations, consistent with the assumption that easily accessible and quantifiable disclosure measures are captured in analysts’ ratings of disclosure quality. This thesis adds to the literature by providing insight into how analysts evaluate disclosure quality and what managers are willing and able to deliver. The research documents attributes of disclosure quality that are regarded as important by financial analysts. While analysts are a key set of financial statement users, there are many other types of users. By understanding disclosure quality from a user's perspective, regulators and researchers are more able to anticipate the implications of a proposed change in disclosure rules.

This thesis has explored the relationship between self-disclosure (Jourard, 1958) and sex-role identity (Bem, 1972). It was hypothesized that these two elements would interact such that those individuals posessing androgynous sex-role identities would self-disclose more fully to a peer than would individuals posessing sex-typed sex-role identities.This project used a 2 (subject gender) X 2 (sex-role identity) x 3 (target condition) design. The initial sample pool consisted of 151 female and 80 male undergraduate student volunteers. The final sample consisted of 43 female and 14 male students. Married subjects, those identified as sex-reversed, and those subjects who did not attend the second experimental session were eliminated from the final sample. Paper-and-pencil tests measured both self-disclosure and sex-role identity.The analysis of data revealed one significant interaction across the parameters investigated. Males were significantly more "filling to disclose highly intimate personal information than were females. Possible reasons for these results were discussed, and suggestions for further research were made.

The purpose of this study was to examine perceptions and reactions to videotaped portrayals of male and female characters shown self-disclosing or not self-disclosing feelings of loneliness. Forty male and forty female volunteer college students participated in the study. Ratings of the characters were obtained for: 1) psychological adjustment, 2) likability, 3) causal attributions, and 4) personal acceptance (as acquaintance, coworker and close friend). The data were analyzed using multivariate and univariate analyses of variance.Findings1. Manipulation checks provided evidence for the effectiveness of the high-low self-disclosure manipulation.2. The analyses showed that there were no significant differences due to sex of participant or character, nor due to level of loneliness disclosure as measured by the above mentioned four scales.3. Supplementary analyses considering the three acceptance scales separately revealed that participants indicated significantly less difficulty in accepting as a close friend the highly self-disclosing male, as compared to: a) the low self-disclosing male, and b) the highly self disclosing female.Conclusions1. The findings suggest there may be fewer negative consequences for self-disclosure of loneliness by males than implied by prior research in the general area of self-disclosure.2. All other things being equal, that is, adjustment, likability, attributions and overall acceptance, females highly disclosing loneliness may be less accepted as close friends than males exhibiting the same behavior. Research is needed to clarify whether high disclosure of loneliness runs contrary to sex-role expectations for females.In light of the above findings, recommendations for further research were made. Measuring participants' attributions on the motivation of characters self-disclosing loneliness was highly recommended.

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Regulators and the general public frequently advocate for higher-quality disclosure policies to reduce information asymmetry. Research and anecdotal evidence documents sizable benefits to firms that maintain high quality disclosure. This thesis explores the costs and benefits of changing disclosure quality from the perspective of the financial analysts, a sophisticated user group. This thesis presents a comprehensive view of analysts’ evaluations of disclosure quality. I investigate capital market reaction when firms experience a sustained decrease in analyst disclosure ratings. The results demonstrate that firms with deteriorating disclosure experience negative consequences, consistent with increasing information asymmetry. However, the magnitude is not as large as expected given the benefits enjoyed when disclosure quality improves. Given that firms that allow their disclosure quality to decline give up benefits they previously enjoy, I investigate why they allow this decline to occur. The deterioration is negatively associated with the interaction between capital demand and expected earnings performance implying that when firms require capital, but are expecting poor future earnings, they are more likely to permit a deterioration to occur. Declines are also associated with the occurrence of various disruptive events that imply greater uncertainty about the firm. These firms have a strong demand for external capital which they satisfy by accessing private and public debt markets. Overall, firms that experience disclosure ratings declines are not a mirror image of firms that experience ratings increases. Finally, I investigate the association between the disclosure ratings and quantitative disclosure characteristics. The results indicate significant associations, consistent with the assumption that easily accessible and quantifiable disclosure measures are captured in analysts’ ratings of disclosure quality. This thesis adds to the literature by providing insight into how analysts evaluate disclosure quality and what managers are willing and able to deliver. The research documents attributes of disclosure quality that are regarded as important by financial analysts. While analysts are a key set of financial statement users, there are many other types of users. By understanding disclosure quality from a user's perspective, regulators and researchers are more able to anticipate the implications of a proposed change in disclosure rules.

I investigate the way in which Australian managers issue their earnings forecasts, and the impact this has on the reaction of equity investors and security analysts. Using a sample of 233 management earnings forecasts issued from 1994 to 2001, I find that managers are more likely to issue earnings forecasts when they have bad earnings news than good earnings news. I find that a vast majority of forecasts are ???framed??? by the use of an accompanying earnings benchmark. Forecasts are issued with varying degrees of specificity (or precision) and also with variation in additional accompanying disclosures. Forecasts issued with negative framing (forecast earnings less than benchmark earnings) are more likely to be accompanied by statements about factors external to the firm in explaining performance, while forecasts issued with positive framing (forecast earnings greater than benchmark earnings) are more likely to be accompanied by additional verifiable forecasts of components of earnings. I find the market reaction to earnings forecasts released with positive framing is higher than for forecasts released with negative framing, after controlling for forecast news and other forecast properties. I also examine security analysts??? forecasts around the release of management earnings forecasts and find that after the release of a management earnings forecast, analyst activity increases, but that analysts??? forecasts become less accurate and more biased. Neither the extent of analyst activity nor changes in analysts??? forecast accuracy or bias is related to forecast framing.