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Future‐oriented narrative reporting: determinants and use

Hussainey, Khaled and Al‐Najjar, Basil (2011) Future‐oriented narrative reporting: determinants and use. Journal of Applied Accounting Research, 12 (2). pp. 123-138. ISSN 0967-5426

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Abstract

Purpose
– The purpose of this paper is to examine the determinants of future‐oriented information in UK annual report narrative sections. The paper also investigates the association between corporate dividend policy and levels of future‐oriented information, as a proxy for information asymmetry.

Design/methodology/approach
– A computer‐based‐content analysis is used to measure levels of future‐oriented information. Tobit and logit regressions are then applied in order to examine the impact of firm characteristics, and corporate governance characteristics on future‐oriented disclosure. In further tests, Tobit and logit regression models are used to investigate the association between corporate dividend policy and levels of future‐oriented information.

Findings
– The authors find that firm size is the main factor affecting the firms’ levels of future‐oriented information. This variable is statistically significant in five regression models. In addition, the authors find that profitability, outsider directorships, and insider ownerships affect the levels of future‐oriented information. However, the significance of these variables depends on whether fixed effects or random effects models are used and whether year dummies are included or excluded in the analyses. Finally, the authors find a positive association between corporate dividend policy and information asymmetry (measured by the levels of future‐oriented information).

Originality/value
– This paper contributes to the existing disclosure studies in two crucial ways. First, it offers the first evidence that levels of future‐oriented information are driven by some firm characteristics, and some corporate governance mechanisms. Second, it offers the first UK evidence of the association between corporate dividend policy and information asymmetry. The results show that dividends and information asymmetry are negatively associated.

Item Type: Article
Uncontrolled Keywords: United Kingdom, Narrative reporting, Annual reports, Future-oriented information, Content analysis, Dividend policy
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Related URLs:
Depositing User: Basil Al-Najjar
Date Deposited: 14 Aug 2017 08:10
Last Modified: 14 Aug 2017 08:10
URI: http://eprints.hud.ac.uk/id/eprint/32788

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