Financial Reporting Standard No3 (FRS 3): Reporting Financial Performance, which came into force in 1993, increased UK firms' discretion in classifying exceptional items. We examine how this increased discretion affected their use of classificatory smoothing and inter-temporal smoothing through...

We examine whether UK firms engage in earnings management or forecast guidance to ensure that their reported earnings meet analyst earnings expectations. We explore two earnings management mechanisms: (a) positive abnormal working capital accruals; and (b) classification shifting of core...

This study explores the market response to achieving analyst earnings expectations, distinguishing between expectations achieved through earnings forecast guidance and earnings management. We consider three earnings management tools: real earnings management, working capital accruals management,...

This research is motivated by interest in recent changes in the audit approaches of audit firms. The business risk audit approach has been adopted based on assertions about its benefits by administrators of large audit firms and academics linked with these firms and, more recently, has been...

The paper presents a new methodology for evaluating corporate voluntary disclosures in the annual report discussion section. Based on a new dataset of electronic annual reports and a standard text analysis software package, we text-search a large number of annual reports at minimal (marginal)...

We extend prior research into the association between disclosure quality and share price anticipation of earnings by discriminating between firms that report profits and firms that report losses. As a measure of disclosure quality we count the number of forward-looking profit statements in...

PurposeTo empirically explore empirically the underlying factors that may affect the extent to which forward-looking information is disclosed.MethodologyThis study uses a list of forward-looking keywords to demonstrate the differences, if any, in the level of disclosure among firms and between...

Purpose – This paper examines the impact of audit quality, measured by financial statements audited by the big four accounting firms, on the investors' ability to predict future earnings for profitable and unprofitable firms.Methodology – The paper uses the returns-earnings regression model...

We investigate the joint effects of dividend propensity (i.e. whether a firm pays cash dividends) and voluntary disclosure on the relationship between current stock returns and future earnings. We examine whether dividend propensity and voluntary disclosure act as substitutes or complements in...