Accounting Policy Disclosures and Analysts' Forecasts
Using an international sample, I investigate whether the extent of firms' disclosure of their accounting policies in the annual report is associated with properties of analysts' earnings forecasts. Controlling for firm‐ and country‐level variables, I find that the level of accounting policy disclosure is significantly negatively related to forecast dispersion and forecast error. In particular, I find that accounting policy disclosures are incrementally useful to analysts over and above all other annual report disclosures. These findings suggest that accounting policy disclosures reduce uncertainty about forecasted earnings. I find univariate but not multivariate support for the hypothesis that accounting policy disclosures are especially helpful to analysts in environments where firms can choose among a larger set of accounting methods.
- DOI
- 10.1506/la87-d1nf-bf06-fw1b
- Volume
- 20 (2)
- Pages
- 295-321
- Language
- en
- Export
- BibTeX
- Sources
- crossref openalex