When Do Qualitative Risk Disclosures Backfire? The Effects of a Mismatch in Hedge Disclosure Formats on Investors’ Judgments
Disclosure standards mandate the quantitative disclosure of hedging-instrument related risks but not the disclosure of hedged item related risks. We examine how a match (mismatch) in formats, caused by making quantitative (qualitative) hedged item disclosures alongside quantitative hedging instrument disclosures, affects investors' integration of information from these two related disclosures. Our first experiment varies the hedged item disclosure format (quantitative or qualitative) and the portion of risk hedged (small or large). We find that when disclosure formats are mismatched, the less comparable nature of the two disclosures caused investors to neglect the offsetting relationship when assessing net risks. As a result, risk and investment judgments were influenced by the more prominent quantitative hedging instrument disclosures. Our second experiment finds that the use of a qualitative debiaser that clarifies the relationship between the two disclosures led to the integration of information and mitigated this effect
Year of publication: |
2019
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Authors: | He, Yanan |
Other Persons: | Tan, Hun-Tong (contributor) ; Yeo, Feng (contributor) ; Zhang, Jixun (contributor) |
Publisher: |
[2019]: [S.l.] : SSRN |
Subject: | Unternehmenspublizität | Corporate disclosure | Hedging | Auskunftspflicht | Disclosure regulation | Risikomanagement | Risk management |
Description of contents: | Abstract [papers.ssrn.com] |
Saved in:
Extent: | 1 Online-Ressource |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | In: Contemporary Accounting Research, Forthcoming Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 18, 2019 erstellt Volltext nicht verfügbar |
Classification: | D81 - Criteria for Decision-Making under Risk and Uncertainty ; G18 - Government Policy and Regulation ; M41 - Accounting ; M48 - Government Policy and Regulation |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012868382