Dan Givoly, Dan Palmon, Classification of Convertible Debt As Common Stock Equivalents: Some Empirical Evidence on the Effects of APB Opinion 15, Journal of Accounting Research, Vol. 19, No. 2 (Autumn, 1981), pp. 530-543
Timeliness of annual reports is an important determinant of their usefulness. This study examines several aspects of the timeliness of earnings announcements which have implications for regulatory actions as well as for research design. The results show a considerable shortening of the reporting lag over the years. This implies that the assumption conveniently made in many "event studies" that the announcement week or month is fixed over the years is inappropriate and tends to weaken the power of the tests. The reporting lag of individual companies appears to be more related to intra-industry patterns and tradition than to company attributes. The ability of most companies to report welt ahead of the filing deadline coupled with the finding that bad news tends to be delayed might be considered in assessing the adequacy of the length of the current filing period. The price reaction to the disclosure of early earnings announcements was significantly more pronounced than the reaction to late announcements suggesting a decrease in the information content as the reporting lag increases.
This article reviews the application of present value techniques by several real estate companies to satisfy the requirements of SEC Accounting Series Release No. 190 and suggests that in the particular circumstances of this industry, the results may be more valid than in the usual industrial situation. Real estate companies tend to bemoan the conventional financial accounting requirement for depreciation of properties. Certain sayings, such as real estate tends to appreciate, not depreciate and a well-maintained property never depreciates, are taken as axiomatic in the industry. The conventional requirement that a provision for depreciation of properties be made in financial statements is a key point of contention. Properties are shown at constantly declining historical cost net book values in the balance sheet, when they are often worth considerably more than cost. Reported income is understated because of the same requirement. These two impacts combine to mislead investors in the opinion of the managements, and tend to cause share prices to be unduly depressed.
Contemporary Accounting ResearchVolume 29, Issue 2 p. 621-654 R&D Intensity and the Value of Analysts’ Recommendations* DAN PALMON, DAN PALMON Rutgers UniversitySearch for more papers by this authorARI YEZEGEL, ARI YEZEGEL Bentley UniversitySearch for more papers by this author DAN PALMON, DAN PALMON Rutgers UniversitySearch for more papers by this authorARI YEZEGEL, ARI YEZEGEL Bentley UniversitySearch for more papers by this author First published: 25 June 2011 https://doi.org/10.1111/j.1911-3846.2011.01117.xCitations: 30 † Accepted by Jeffrey Callen. We would like to thank Sudipta Basu (discussant), Jeffrey Callen (associate editor), Alia Crocker, Rani Hoitash, Pyungkyung Kang, Ann Medinets, Bharat Sarath, Ephraim F. Sudit, the anonymous referees of this Journal, and seminar participants at Bentley University, Lehigh University, Penn State at Great Valley, and the University of Delaware for their valuable comments and suggestions. We also benefited from comments of participants at the American Accounting Association 2008 Annual Meeting and American Accounting Association 2009 Northeast Region Meeting. This research was supported in part by a Faculty Research Grant from Rutgers Business School—Newark and New Brunswick. Ari Yezegel acknowledges the generous financial support provided by Bentley University through the FAC grant. All errors are the authors’ responsibility. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume29, Issue2Summer 2012 (June)Pages 621-654 RelatedInformation
We examine the relation between voluntary disclosure and the value of analysts' research by studying the change in the informativeness of analysts' research after managers stop providing quarterly guidance to investors. We find that the market reaction to analysts' recommendation revisions increases significantly after guidance stoppage, controlling for confounding factors as well as for firm and time fixed effects. The increase in market reaction is greater for firms with more opaque information environments and for firms that previously provided disaggregated guidance. Further, the effect of guidance stoppage on the informativeness of analysts' research reverses after managers resume guidance. Finally, textual analyses of analysts' reports before and after guidance stoppage reveal that analysts issue longer, more frequent, and more detailed reports that convey more forward‐looking information after stoppages. These findings collectively shed light on the relation between the supply of voluntary disclosure and the value that sell‐side analysts add to price discovery in capital markets.
We select a small set of recommendations that lie in the upper and lower tail of the empirical distribution of divergences between a recommendation, and the consensus over the window (−30, −1) days prior to that recommendation. We classify these extremely divergent recommendations as bold, and then subdivide them into informative bold recommendations that lead other analysts (leading‐bold) and those that are ignored by other analysts (contra‐bold) based on the consensus change in the 30 days after the announcement. We focus on the information conveyed to the market by these bold, leading‐bold, and contra‐bold recommendations through their effects on cumulative abnormal returns (CAR). We find that bold recommendations are not anticipated by market participants (CARs are negative before a bold buy and positive before a bold sell). The next finding is that the market responds strongly to both leading and contra‐bold recommendations over the (0, +4)‐day window and that these reactions are stronger than that to nonbold recommendations. In contrast, over the longer (0, +30)‐day window, leading‐bold recommendations earn additional returns whereas contra‐bold ones reverse significantly due to lack of confirmation. The overall pattern is one of rational market reaction both in the short and long windows. We support the rationality of the market reaction by showing that the percentage of leading‐bold recommendations exceeds that of contra‐bold recommendations, and that these two types of recommendations cannot be separated using observable analyst characteristics such as experience or brokerage size.