The first dimension results in uncritical acceptance of rules and norms, the second results in a propensity to seek firm-specific advantage in how disclosures are made and interpreted. Disclosure scores are higher for firms that perform well, for larger firms, for firms with a weaker relation between annual stock returns and earnings, and for firms that issue securities.
Management responds to increasing institutional ownership with higher quality disclosure.
Content analysis of Financial Post booklets indicates that the concepts of disclosure, informativeness, and usefulness to investors are important in a judge's ranking. Changes in winners' stock prices are less correlated with contemporaneous changes in earnings in the award year than are those of nonwinners. In addition, winners have larger increases in return variability during the announcement week of annual report than do nonwinners. Increased disclosure appears to be effective in helping investors to value short-term earnings growth. In addition, a high level of disclosure appears to create additional consensus among investors, leading to increased liquidity for the firm's stocks.