TRES FORMAS PARA DISMINUIR O “DESINFLAR” LOS INGRESOS

and summarizes disclosure index research covering a time span of over 30 years.

3.2. Investigation of the determinants of the information disclosed in interim reports

This part of the survey of prior research focuses mainly on the development of disclosure index literature. Some problem areas related to this literature are identified. This is done in order to illustrate the necessity of the improvements incorporated in the disclosure index constructed in this study.

Beginning with the early work by Cerf (1961), the use of financial reports has been a continuous topic of study. In the 1970s, disclosure research was fairly intense, mainly in the U.S.A. One of the obvious reasons is that the U.S. Securities and Exchange Commission (SEC) issued “more accounting releases since 1972 than it had in the previous 26 years.” (Beaver, 1978, p. 44). Prior to 1976, the level of disclosure was interpreted by applying variables mainly based on a prima facie understanding of the use of disclosure. Appendix A summarizes some of the studies. Marston and Shrives (1991) provide a review of these studies.

Theoretical developments during the 1970s helped to formulate more specific and advanced research hypotheses for corporate disclosure. One of the key works in the development of the theory was Jensen and Meckling (1976). Following their study, disclosure mainly attempted to explain the monitoring function of principals in the relationship between principal and agent (outsiders and management). However, some of the variables based on the monitoring function were insufficiently derived. This deficiency has led to criticism. Leftwich, Watts, and Zimmerman (1981) attempted to explain voluntary interim reporting in terms of the theory of agency and monitoring. Burton (1981) and Schipper (1981) argue that the theory of agency and monitoring is not sufficiently developed to accommodate the level of institutional detail in the variables proposed by Leftwich et al. Ball and Foster (1982, p. 192) agree. It has also been suggested that the Leftwich et al. study should be replicated, since the data are over 30 years old. The recommendation is to do so in European countries with more recent data (Burton, 1981, p. 83).

Several conclusions can be drawn based on prior literature. The emphasis in disclosure index studies to date has been on annual reports. The reason for using annual reports instead of interim reports is not usually explicitly stated. It appears that large firms disclose more information than small ones. The concern of the capital markets is with high disclosure. Over time, the quality of disclosure seems to have improved. Risk measures, such as beta, seem not to be undisputedly related to disclosure. It is also interesting to note that accountants and analysts have somewhat different views of the importance of various items. This indicates the lack of communication between different interest groups. It should be borne in mind that the vast majority of the studies listed in appendix A have somewhat different indices. One of the studies, Wallace (1988), standardizes indices in prior studies in order to establish whether there is a consensus in different disclosure studies.

Wallace (1988) standardizes the disclosure indices used in nine studies. The author reports 16 disclosure indices. Standardization allows the importance of items in each separate study to be evaluated together. One outcome of this standardization is that the items applied in previous studies are all categorized into dominance quartiles. The dominance of a quartile reveals the preference of different user groups for that item. It is reported that there are 15 items in the most important dominance quartile, which has a perception consistency of over 60 percent. There seem to be only a limited number of items with the highest importance.

Therefore, the best policy to follow in the construction of a disclosure index would seem to be to make the number of items as small as possible without sacrificing important items. The American Institute of Certified Public Accountants has

mentioned this in one of its recommendations (Recommendation No. 7 in AICPA, 1994, p. 124): “Standard setters should search for and eliminate less relevant disclosures.”

During the 1990s, more user-defined disclosure indices have been applied. These studies attempt to determine what disclosures are effective in business communication. Recently, the focus has moved toward an integral type of disclosure strategy (Lev, 1992). Ratings published by the Association for Investment Management and Research (AIMR) have been applied in several recent studies (see appendix A). Although these indices are probably more user-oriented than those developed in prior studies, there are also some deficiencies. One is that the AIMR indices are not necessarily based directly on original reports. Lang and Lundholm recognize this deficiency (1993, p. 269):

As mentioned previously, however, use of these disclosure scores [published by the Financial Analysts Federation (FAF), AIMR comprises the Institute of Chartered Financial Analysts (ICFA) and FAF] is not without its dangers; particularly because the data are based on analysts’ ratings rather than the disclosures themselves. To the extent that analysts’ ratings are biased and the bias varies cross-sectionally with the independent variables of interest, care should be exercised in interpreting the results.

In addition, those opinions that constitute the ranking of intertemporal studies probably change over time. This would also cause some biases/inconsistencies over time. In this study, the measures of disclosure are established from the original interim reports to minimize the influence of any perceptive bias.