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Management International Review
Published in: Management International Review 1/2014

01-02-2014 | Research Article

Voluntary Disclosure of Press Releases and the Importance of Timing: A Comparative Study of the UK and Spain

Authors: Encarna Guillamón-Saorín, Carlos M. P. Sousa

Published in: Management International Review | Issue 1/2014

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Abstract

This paper investigates the effect of proprietary costs in relation to managers’ decisions to disclose information. Further, we look into the impact of factors affecting the timing of disclosures in a comparative study of Spain and the UK. Our investigation focuses on management earnings press releases discussing annual results. These press releases allow managers great discretion in terms of the decision to release and the timing. Our results show that the potential for growth is negatively related to the likelihood of a company voluntarily issuing a press release. Moreover, once the decision to voluntarily disclose is made, the timing is also relevant. We find significant differences in the timing of press releases between the two countries examined in this study. Also, significant differences between companies having or not having an investor relations department are evident. The existence of an investor relations function in the company seems to have a different impact depending on the country. Interestingly, even though corporate performance seems not to have a direct effect on the timing of the press release, this factor is moderated by the country where companies operate.
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Footnotes
1
Relevance is one of the qualitative characteristics that make financial information useful. The qualitative characteristics are complementary concepts but can be distinguished as fundamental (relevance and faithful representation) and enhancing (comparability, verifiability, timeliness, and understand ability), based on how they affect the usefulness of information (IASB 2008).
 
2
While a recent study by Guillamón-Saorín and Sousa (2010) investigates the factors that influence the disclosure of ARPRs, it does not look into proprietary costs related to corporate disclosure.
 
3
The study of 1999 (Dircom 2000) shows that only 58 % of the companies have a communication manager to coordinate different communication activities.
 
4
These studies use different proxies for news. For example, analyst forecast errors are used by Begley and Fischer (1998). Sengupta (2004) uses the median analyst forecast as a benchmark to be compared with actual EPS.
 
5
Using a matched-pair design allows a more precise comparison between the two countries and provides a natural control for industry and size (Lang and Lundholm 2000).
 
6
Datastream’s FTAG4 index, also called INDC4, has up to 38 industrial sectors based on the FTSE-Actuaries system. It uses the same classification system for both Spanish and UK companies.
 
7
A Mann–Whitney U test is used to check for the differences between the sizes of the sample of companies for the two countries. Market value mean for the UK is EUR 6,670 million and for Spain EUR 3,324 million. Results not tabulated showed no significant differences between the samples sizes (Z-statistic = −0.04; p = 0.48, two tailed probability).
 
8
All the ARPRs included in the study were issued before October 2001.
 
9
Results are similar when we define the proxy as the market-to-book value of assets (Bamber and Cheon 1998; Gaver and Gaver 1993).
 
10
As in prior literature (Bamber and Cheon 1998), we also vary the measure by scaling market-to-book value by assets. Results do not change.
 
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Metadata
Title
Voluntary Disclosure of Press Releases and the Importance of Timing: A Comparative Study of the UK and Spain
Authors
Encarna Guillamón-Saorín
Carlos M. P. Sousa
Publication date
01-02-2014
Publisher
Springer Berlin Heidelberg
Published in
Management International Review / Issue 1/2014
Print ISSN: 0938-8249
Electronic ISSN: 1861-8901
DOI
https://doi.org/10.1007/s11575-013-0194-z

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Acknowledgment

Acknowledgment to MIR Board Members and Ad-hoc Reviewers

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