Essays in financial accounting disclosure
Content Type
Faculty
Carrera/Programa
- Doctorado en Finanzas
Author
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Título al que opta
- [Doctor en Finanzas]
Modalidad
- Tesis monográfica
Keywords
- Disclosure statements (Accounting)
- Monetary policy.
Descriptores
- Divulgación financiera
- Obras de graduación UAI
Abstract
This paper proposes that the readability of financial reports can act as a signaling device used by
firms that report their performance truthfully to distinguish themselves from those that have
manipulated earnings. The signal is credible because manipulators cannot provide a clear financial
report without bearing the risk of being identified as such. To test these ideas, we empirically
evaluate the effect of report readability on the post-filling stock price volatility among a pool of
suspicious firms that barely meet or just beat last years’ earnings. Consistent with the signaling
effect, we find that readability enhances stock price convergence to fundamental values among this
set of firms, and this effect is stronger when the screening cost for investors is higher.
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