Journal article
Unobservable precision choices in financial reporting
Journal of accounting research, Vol.34(1), pp.141-149
04/01/1996
DOI: 10.2307/2491336
Abstract
The audited estimates of future events in financial reports contain uncertainty which is partly subject to managerial discretion. However, because firms do not routinely report the precision of their estimates, outside parties may be unsure about how the estimates should be interpreted. A scenario is modeled in which management privately commits to a precision level at the beginning of the reporting period, immediately after the realization of a public signal which is informative about the firm's market value. It is shown that the incentive to develop more precise information is a function of future prospects: firms with poor prospects choose more precise disclosures, while firms with good prospects choose less precise disclosures.
Details
- Title: Subtitle
- Unobservable precision choices in financial reporting
- Creators
- Mark Penno
- Resource Type
- Journal article
- Publication Details
- Journal of accounting research, Vol.34(1), pp.141-149
- DOI
- 10.2307/2491336
- ISSN
- 0021-8456
- eISSN
- 1475-679X
- Publisher
- Blackwell Publishing Ltd
- Language
- English
- Date published
- 04/01/1996
- Academic Unit
- Accounting
- Record Identifier
- 9984963111002771
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