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Muslu, Volkan; Radhakrishnan, Suresh; Subramanyam, K. R.; Lim, Dongkuk

Forward-Looking MD&A Disclosures and the Information Environment

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  • Media type: E-Article
  • Title: Forward-Looking MD&A Disclosures and the Information Environment
  • Contributor: Muslu, Volkan; Radhakrishnan, Suresh; Subramanyam, K. R.; Lim, Dongkuk
  • imprint: Institute for Operations Research and the Management Sciences (INFORMS), 2015
  • Published in: Management Science
  • Language: English
  • DOI: 10.1287/mnsc.2014.1921
  • ISSN: 0025-1909; 1526-5501
  • Origination:
  • Footnote:
  • Description: <jats:p> We use computer-intensive techniques to study the informational properties of forward-looking disclosures in the management discussion and analysis (MD&amp;A) sections of 10-K filings made with the Securities and Exchange Commission. We find that firms make more forward-looking MD&amp;A disclosures when their stock prices have lower informational efficiency, i.e., when their stock prices poorly reflect future earnings information. The greater levels of forward-looking MD&amp;A disclosures help improve yet are unable to completely mitigate the lower informational efficiency of stock prices for such firms. These findings are stronger for operations-related forward-looking disclosures, disclosures that are made prior to 2000, and disclosures made by loss firms. </jats:p><jats:p> Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1921 . </jats:p><jats:p> This paper was accepted by Mary Barth, accounting. </jats:p>