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Voluntary disclosure of operating income
Author(s) -
Wong Jilnaught,
Wong Norman
Publication year - 2010
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.2009.00319.x
Subject(s) - earnings , net income , earnings before interest and taxes , income tax , income statement , leverage (statistics) , business , gross income , write off , comprehensive income , net interest income , accounting , voluntary disclosure , labour economics , operating leverage , passive income , economics , finance , state income tax , public economics , interest rate , tax reform , balance sheet , machine learning , profitability index , computer science
This study investigates whether New Zealand firms’ voluntary disclosure of operating income, which is also known as earnings before interest and tax, in the income statement is related to the investment opportunity set. New Zealand provides an ideal setting to examine this because New Zealand generally accepted accounting principles do not require the disclosure of operating income as an intermediate income number in arriving at net income (earnings) in the income statement. We hypothesize and find evidence that firms with high assets‐in‐place and high leverage are more likely to voluntarily disclose operating income/earnings before interest and tax. However, the assets‐in‐place finding is sensitive to alternative measures of the investment opportunity set.