Search results

1 – 1 of 1
Per page
102050
Citations:
Loading...
Article
Publication date: 13 May 2014

Marie Josée Ledoux, Denis Cormier and Sylvain Houle

The purpose of this paper is to study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, the paper explores the relationships…

927

Abstract

Purpose

The purpose of this paper is to study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, the paper explores the relationships between customer value disclosure, analyst following, and earnings forecasts, taking into account environmental dynamism as captured by R&D intensity, sales variability, and the reverse of industry concentration.

Design/methodology/approach

The paper considers the possibility that a firm's information dynamics may simultaneously affect disclosure strategy, analyst following, and analyst forecasts. Regression models are used in the testing of the hypotheses.

Findings

First, results show that customer value disclosure is positively associated with analyst following and consensus in analyst earning forecasts. Second, environmental dynamism enhances the association between customer value disclosure and analyst following as well as consensus among analysts. Those results suggest that customer metrics attract analysts and improve their ability to forecast earnings. Moreover, customer value disclosure appears particularly relevant for forecasting earnings of firms involved in dynamic environments.

Practical implications

Customer value disclosure would allow financial analysts to better assess future earnings in a context of uncertainty. Moreover, analysts may be reluctant to follow a firm facing high environmental dynamism without a clear corporate disclosure commitment. In such a context, managers may consider disclosing strategic information in an attempt to attract financial analysts.

Originality/value

The findings reveal that the relations between customer value disclosure, analyst following, and analyst forecasts are not straightforward but are affected by a firm's environmental uncertainty.

Details

Management Decision, vol. 52 no. 3
Type: Research Article
ISSN: 0025-1747

Keywords

1 – 1 of 1
Per page
102050