Institutional Differences of Information Content On Voluntary Earnings Releases In The U.S. and Canada
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Keywords

Voluntary Earnings
U.S.
Canada

How to Cite

Stunda, R. . (2015). Institutional Differences of Information Content On Voluntary Earnings Releases In The U.S. and Canada. Journal of Business Strategies, 32(1), 41–54. https://doi.org/10.54155/jbs.32.1.41-54

Abstract

Historically, Canadian laws have created a less litigious environment than
those of the U.S. This changed in 1998 with the passage of the Securities Litigation
Uniform Standards Act (SLUSA), and in 2000 with the passage of Regulation Full
Disclosure (Regulation FD). The intent of these acts were to not only encourage
more U.S. firms to release voluntary earnings forecasts, but to offer protection for
such disclosures against lawsuits, similar to laws in Canada. In addition, with the
advent of International Financial Accounting Standards (IFRS), voluntary earnings
releases play a bigger role, in increased frequency and revision of forecasts. Since
Canada requires the use of IFRS in financial reporting, it serves as a good base of
comparison of what may be to come in the U.S. These types of differences comprise
what can be characterized as institutional differences.
This study finds that Canadian managers tend to issue voluntary earnings
forecasts more frequently across the board than their U.S. counterpart, even after
the interdiction of SLUSA and Regulation FD in the U.S. In addition, the Canadian
forecasts tend to be more precise than those offered by U.S. managers. On the surface,
it appears that the SLUSA and Regulation FD have not completely achieved
their goal of creating greater and more informative voluntary earnings disclosures
in the U.S., but in addition, IFRS adoption in Canada may have also led to the increased
frequency and accuracy of earnings forecasts.

https://doi.org/10.54155/jbs.32.1.41-54
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