Voluntary disclosure of intangibles and analysts’ earnings forecasts and recommendations
Abstract
Purpose
The purpose of this paper is to investigate the relationship between voluntary disclosure of intangibles and financial analysts’ earnings forecasts properties.
Design/methodology/approach
Disclosures about intangible assets were hand-collected through content analysis of annual reports of a sample of US non-financial firms, while analysts’ earnings forecasts properties were collected from Bloomberg Professional database. The authors relied on correlation and multivariate regression analyses to test the research hypotheses.
Findings
The results show that increased intangible disclosures affect analysts’ earnings forecasts accuracy, dispersion, and favourable consensus recommendations. However, this effect varies according to the nature of intangible assets.
Practical implications
The results may be of interest to different market participants such as corporate managers, financial analysts, and standards setting bodies that recently published guidelines on voluntary disclosure of intangibles.
Originality/value
This study develops a new comprehensive index to measure the content of narrative disclosures about a large number of intangibles, such as human, structural, and relational assets. The findings contribute to the current debate on the value-relevance of narrative disclosures on intangibles to investors and financial analysts.
Keywords
Acknowledgements
The authors gratefully acknowledge the financial support from the CPA Canada Accounting and Governance Research Centre at the University of Ottawa. The authors would also like to thank Dr Julia Mundy (editor) and two anonymous reviewers for their insightful comments and suggestions.
Citation
Maaloul, A., Ben Amar, W. and Zeghal, D. (2016), "Voluntary disclosure of intangibles and analysts’ earnings forecasts and recommendations", Journal of Applied Accounting Research, Vol. 17 No. 4, pp. 421-439. https://doi.org/10.1108/JAAR-10-2014-0105
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited