Future-oriented narrative reporting: determinants and use

Article


Hussainey, K. and Al-Najjar, B. 2011. Future-oriented narrative reporting: determinants and use. Journal of Applied Accounting Research. 12 (2), pp. 123-138. https://doi.org/10.1108/09675421111160691
TypeArticle
TitleFuture-oriented narrative reporting: determinants and use
AuthorsHussainey, K. and Al-Najjar, B.
Abstract

Purpose – The purpose of this paper is to examine the determinants of future-oriented information in UK annual report narrative sections. The paper also investigates the association between corporate dividend policy and levels of future-oriented information, as a proxy for information asymmetry.
Design/methodology/approach – A computer-based-content analysis is used to measure levels of future-oriented information. Tobit and logit regressions are then applied in order to examine the impact of firm characteristics, and corporate governance characteristics on future-oriented disclosure. In further tests, Tobit and logit regression models are used to investigate the association between corporate dividend policy and levels of future-oriented information.
Findings – The authors find that firm size is the main factor affecting the firms’ levels of future-oriented information. This variable is statistically significant in five regression models. In addition, the authors find that profitability, outsider directorships, and insider ownerships affect the levels of future-oriented information. However, the significance of these variables depends on whether fixed effects or random effects models are used and whether year dummies are included or excluded in the analyses. Finally, the authors find a positive association between corporate dividend policy and information asymmetry (measured by the levels of future-oriented information).
Originality/value – This paper contributes to the existing disclosure studies in two crucial ways. First, it offers the first evidence that levels of future-oriented information are driven by some firm characteristics, and some corporate governance mechanisms. Second, it offers the first UK evidence of the association between corporate dividend policy and information asymmetry. The results show that dividends and information asymmetry are negatively associated.

KeywordsAnnual reports; content analysis; dividend policy; future-oriented information; narrative reporting; United Kingdom
PublisherEmerald
JournalJournal of Applied Accounting Research
ISSN0967-5426
Publication dates
PrintSep 2011
Publication process dates
Deposited18 May 2010
Output statusPublished
Digital Object Identifier (DOI)https://doi.org/10.1108/09675421111160691
LanguageEnglish
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