Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor...
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Transcript of Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor...
![Page 1: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/1.jpg)
Information Disclosure Strategy
B. Lev (1992)
Presented by:
Ken Chong
Robyn Fulkerson
Allison Taylor
Terry Woods
![Page 2: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/2.jpg)
Introduction
Voluntary Information Disclosure Limited planning Little attention
Results of Disclosure Study 100 companies surveyed 55 companies with < 4 disclosures Only 16 companies with at least 1
disclosure
![Page 3: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/3.jpg)
Impact of lack of Voluntary Disclosure Generally detrimental Significant and long-lasting Costly Capital market efficiency
![Page 4: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/4.jpg)
Importance of Information Disclosure Provides benefits and incur costs the
same as other corporate activities Warrants careful attention and long-
term planning Information Disclosure Strategy
![Page 5: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/5.jpg)
Empirical Findings Strategy announcements Acquisition announcements New product announcements Managerial earnings forecasts Warnings Dividend decrease Management’s discussion Analysts monitoring Equity carve outs Entry deterrence
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Conclusions from Empirical Findings Voluntary disclosure significantly impacts capital
markets stock price & trade volumes also on share volatility, liquidity, shareholder mix,
confidence of suppliers/customers Efficient markets assure quick/proper reaction Deters competitors Use disclosure strategy to manage analyst’s
expectations Despite strict rules much latitude to acceptable legal
& GAAP standards
![Page 7: Information Disclosure Strategy B. Lev (1992) Presented by: Ken Chong Robyn Fulkerson Allison Taylor Terry Woods.](https://reader035.fdocuments.net/reader035/viewer/2022072013/56649e4e5503460f94b45ad4/html5/thumbnails/7.jpg)
Who Benefits?
Financial analysts Competitors Sophisticated investor
Managers Stakeholders
Impacts decisions & activities Information gap
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Value Creation
Affects outside perceptions Cost of capital/ input prices Terms of trade
Affects information gap – Agency theory Depressed values Low investor certainty Evaluation costs
Direct Value: narrows information gap Indirect Value: enhances corporate activities
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Strategic Objectives
Correcting misvaluations Enhancing liquidity Changing shareholder mix Deterring political/regulatory
intervention Gaining competitive advantage
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Cost of Disclosure
Direct costs - processing/disseminating info Indirect costs - impact on a company’s
decisions/activities supplier terms competitive position costs litigation costs
Simultaneous and contradictory effects on various stakeholder groups - consider all stakeholders
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Summary
Voluntary disclosure can have significant impact in capital markets
View as a corporate activity like production or marketing
Especially important for new technology, small or politically sensitive industries
Disclosure strategy an integral activity if a firm is to realize full value
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Insights and Implications
Strategy implications - disclosure strategy + integration
Simultaneous and contradictory effects Disclosure vs. management inability Congruence with Agency/PA theories Implementation - GAAP/Voluntary Impact
Conservatism Prospective Verifiable Commitment
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Class Discussion
Questions????