The economic implications of corporate financial reporting

Journal Article (Journal Article)

We survey and interview more than 400 executives to determine the factors that drive reported earnings and disclosure decisions. We find that managers would rather take economic actions that could have negative long-term consequences than make within-GAAP accounting choices to manage earnings. A surprising 78% of our sample admits to sacrificing long-term value to smooth earnings. Managers also work to maintain predictability in earnings and financial disclosures. We also find that managers make voluntary disclosures to reduce information risk and boost stock price but at the same time, try to avoid setting disclosure precedents that will be difficult to maintain. © 2005 Elsevier B.V. All rights reserved.

Full Text

Duke Authors

Cited Authors

  • Graham, JR; Harvey, CR; Rajgopal, S

Published Date

  • January 1, 2005

Published In

Volume / Issue

  • 40 / 1-3

Start / End Page

  • 3 - 73

International Standard Serial Number (ISSN)

  • 0165-4101

Digital Object Identifier (DOI)

  • 10.1016/j.jacceco.2005.01.002

Citation Source

  • Scopus