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Evidence That Management Discussion and Analysis (MD&A) is a Part of a Firm's Overall Disclosure Package *
Author(s) -
CLARKSON PETER M.,
KAO JENNIFER L.,
RICHARDSON GORDON D.
Publication year - 1999
Publication title -
contemporary accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.769
H-Index - 99
eISSN - 1911-3846
pISSN - 0823-9150
DOI - 10.1111/j.1911-3846.1999.tb00576.x
Subject(s) - accounting , quality (philosophy) , business , psychology , full disclosure , computer science , philosophy , computer security , epistemology
The objective of this study is to investigate the role, if any, that management discussion and analysis (MD&A) plays in a firm's disclosure package. First, we present evidence regarding the usefulness of MD&A. Our evidence is uniformly supportive of the view that MD&A is a source of new and useful information and indicates that MD&A is used for financial analysis purposes by at least one significant user group, sell‐side analysts, who are members of the Toronto Society of Financial Analysts. We then provide evidence on disclosure quality. The results reveal that, overall, MD&A disclosure quality varies with disclosure stimuli similar to those found to influence disclosure choice in other disclosure channels. However, a more refined analysis of the MD&A subcomponents reveals that different factors influence disclosure quality for those subcomponents. Taken together, our results are consistent with the notion that MD&A is a part of a firm's overall disclosure package.