An Analysis of Financial Reporting

Part of the Contributions to Management Science book series (MANAGEMENT SC.)


This chapter examines mandatory disclosure as a form of corporate information. We show that, both from a theoretical and an empirical perspective, prior research documents mandatory disclosure’s usefulness for mitigating the information asymmetry between insiders and outsiders. Nonetheless, the current accounting system presents substantial limitations with regard to the production and use of corporate disclosure. We document that mandatory corporate disclosure is investor focused and may privilege either its information role, i.e. the relevant disclosure to investors, or its contracting role, i.e. monitoring and evaluating managers’ performance. We observe substantial variability in the quality of corporate information produced and discuss the main patterns for opportunistic reporting. We also show a decreasing value relevance of corporate information, in particular for the New Economy firms. The analysis of the accounting standards regulatory process and the assurance process shows the limits of the ongoing one size fits all approach. We, therefore, urge the need for a more dynamic and holistic approach to corporate regulation and assurance. We conclude this chapter by suggesting numerous future avenues for research, particularly in terms of empirical questions and research design.


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© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of AccountingMonash UniversityCaulfield East - MelbourneAustralia
  2. 2.Department of Economics and ManagementUniversity of PisaPisaItaly

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