Review of Quantitative Finance and Accounting

, Volume 52, Issue 2, pp 493–519 | Cite as

Do forward-looking narratives affect investors’ valuation of UK FTSE all-shares firms?

  • Ahmed HassaneinEmail author
  • Alaa Zalata
  • Khaled Hussainey
Original Research


Narrative reporting is an important avenue for investors to know more about a company from the eyes of its board of directors. This study aims to examine the impact of forward-looking disclosures on the values of UK FTSE all-shares non-financial firms. It uses a sample of annual report narratives from 2005 to 2014 to determine that the values of UK FTSE all-shares firms are positively influenced by the disclosure of forward-looking information. Besides, after distinguishing between high and low-performing firms, the study finds that forward-looking disclosures have no effect on the values of high-performing firms, though they positively enhance investors’ valuation of low-performing firms. Furthermore, the study concludes that when UK firms are divided based on the size of the audit firm (Big 4 vs. non-Big 4 auditors), forward-looking disclosures only positively affect the values of FTSE all-shares firms that are audited by one of the Big 4 auditing firms. Therefore, the results suggest that forward-looking information in UK narrative reporting statements is seen as credible for firms that are audited by a large auditor and/or are low-performing.


Narrative reporting Forward-looking information Firm value UK 

JEL Classification




We would like to thank Dear Prof. Cheng-few Lee (The Editor of Review of Quantitative Finance and Accounting) and the anonymous referee for helpful comments and suggestions. This paper has been benefited from comments and suggestions from the reviewer committees and participants at the British Accounting and Finance Association (BAFA) Conference at University of Bath (March, 2016), and the 39th European Accounting Association (EAA) Annual Congress at Maastricht University (May, 2016). Also, we would like to thank Professor Hassan Yazdifar (University of Salford, UK) for helping in language editing and proofreading of the manuscript.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Ahmed Hassanein
    • 1
    • 2
    Email author
  • Alaa Zalata
    • 2
    • 3
  • Khaled Hussainey
    • 4
  1. 1.Gulf University for Science and Technology (GUST)West MishrefKuwait
  2. 2.Mansoura UniversityMansouraEgypt
  3. 3.University of SouthamptonSouthamptonUK
  4. 4.University of PortsmouthPortsmouthUK

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