Journal articles on the topic '10-Q filings'
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1
Chiu, Tiffany, Feiqi Huang, Yue Liu, and Miklos A. Vasarhelyi. "The impact of non-timely 10-Q filings and audit firm size on audit fees." Managerial Auditing Journal 33, no. 5 (May 8, 2018): 503–16. http://dx.doi.org/10.1108/maj-10-2017-1673.
Abstract:
Purpose Prior studies suggest that non-timely 10-Q filings indicate higher potential risks than non-timely 10-K filings. Furthermore, larger audit firms tend to be more risk-averse and conservative about reporting. Inspired by these research streams, this paper aims to investigate the influence of non-timely 10-Q filings on audit fees and the impact of audit firm size on this association. Design/methodology/approach The cross-sectional audit fee regression model used in this study is similar to that used in prior audit fee research (Simunic, 1980; Francis et al., 2005; Hay et al., 2006; Wang et al., 2013). The model includes the following five major characteristics that would influence auditors’ fee decisions: auditee size (LNAT), complexity (REIVAT, FOREIGN, SEG), financial condition (LOSS, ROA, GROWTH, ZSCORE), special events (ICW, RESTATE, INITIAL, GC) and auditor type (BIG4). To examine the effect of non-timely 10-Q filings on audit fees, the variable NT10Q is included in the audit fee model. Findings The results indicate that when both non-timely 10-K and non-timely 10-Q filings are included in the regression model, only non-timely 10-Q filings are significantly associated with higher audit fees, suggesting that the presence of non-timely 10-Q filings signals more serious underlying problem than non-timely 10-K filings in the audit fees decision processes. In addition, we find that audit fees for firms audited by Big 4 auditors are 26.4 per cent higher when those firms file non-timely 10-Q reports, whereas there is no significant association between non-timely 10-Q filings and audit fees for firms audited by non-Big 4 auditors. Practical implications As no attention has been paid to the investigation of the impact of non-timely 10-Q filings on audit fees, with the aim of filling the gap of this specific research area, this study examines the association between non-timely 10-Q filings and audit fees and the influence of audit firm size on this association. Originality/value The contribution of this paper is threefold: first, it is the first study to examine the association between non-timely 10-Q filings and audit fees. The results show that non-timely 10-Q filings are a better and earlier indicator of audit risk than non-timely 10-K filings. Second, the results reveal that the relationship between non-timely 10-Q filings and audit fees is affected by audit firm size. Specifically, Big 4 auditors tend to charge higher audit fees in the presence of non-timely 10-Q filings, reflecting that they are more sensitive to audit risk than smaller audit firms are. Third, an examination of the quarterly effect of non-timely 10-Q filings on audit fees indicates a stronger effect from the first quarter’s non-timely 10-Q filings, compared to the second or third quarter.
2
Chen, Yi-Ching, Tawei Wang, and Jia-Lang Seng. "Voluntary accounting changes and post-earnings announcement drift." Asian Review of Accounting 23, no. 1 (May 5, 2015): 2–16. http://dx.doi.org/10.1108/ara-01-2014-0005.
Abstract:
Purpose – The purpose of this paper is to investigate the relation between voluntary accounting changes (VACs) and post-earnings announcement drift. In addition, the authors examine how accounting choice heterogeneity moderates such association. Design/methodology/approach – The authors collect VAC firms in the US in the period from 1994 to 2008 and identify the heterogeneity of accounting choices between VAC and non-VAC firms. To test the hypotheses, the authors consider a 10-Q filing window and a post-filing drift window. The 10-Q filing window begins from one trading day before and ends on one trading day after the quarterly report filing date. The post-filing drift window begins from two trading days after the filing date and ends on 60 trading days with respect to the earnings announcement date. Findings – The results demonstrate that, overall, VAC does not affect the three-day market reactions to 10-Q filings. However, after taking into account the accounting choice heterogeneity, the authors observe that VAC is positively related to the market reactions to surprises and negatively associated with the post-filing period drift. Originality/value – The paper contributes to the literature by showing that VACs affect the market’s responses to 10-Q filings only when such change results in different accounting practices compared to the VAC firm’s major competitors. Furthermore, given the change with heterogeneity requires more time to process, VACs are related to post-filing announcement drift.
3
Lambert, Sherwood Lane, Kevin Krieger, and Nathan Mauck. "Analysts’ forecasts timeliness and accuracy post-XBRL." International Journal of Accounting & Information Management 27, no. 1 (March 4, 2019): 151–88. http://dx.doi.org/10.1108/ijaim-05-2017-0061.
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Purpose To the authors’ knowledge, this paper is the first to use Detail I/B/E/S to study directly the timeliness of security analysts’ next-year earnings-per-share (EPS) estimates relative to the SEC filings of annual (10-K) and quarterly (10-Q) financial statements. Although the authors do not prove a causal relationship, they provide evidence that the average time from firms’ filings of 10-Ks and 10-Qs to the release of analysts’ annual EPS forecasts during short timeframes (for example, 15-day timeframe from a 10-K’s SEC file date) subsequent to the 10-K and 10-Q filing dates significantly shortened with XBRL implementation and then remained relatively constant following implementation. Design/methodology/approach Using filing dates hand-collected from the SEC website for 10-Ks during 2009-2011 and filing dates for 10-Ks and 10-Qs during 2003-2014 input from Compustat along with analysts’ estimated values for next year EPS, actual estimated next year EPS realized and estimate announcement dates in Detail I/B/E/S, the authors study the days from 10-K and 10-Q file dates to announcement dates and the per cent errors for individual estimates during per- and post-XBRL eras. Findings The authors find that analysts are announcing next-year EPS forecasts significantly more frequently and in significantly shorter time in zero to 15 days immediately following 10-K and 10-Q file dates post-XBRL as compared to pre-XBRL. However, the authors do not find a significant change in forecast accuracy post-XBRL as compared to pre-XBRL. Research limitations/implications Because this study uses short timeframes immediately following the events (filings of 10-Ks and 10-Qs), the relationship between 10-Ks and 10-Qs with and without XBRL and improved forecast timeliness is strengthened. However, even this strengthened difference-in-difference methodology does not establish causality. Future research may determine whether XBRL or other factors cause the improved forecast timeliness the authors’ evidence. Practical implications This improved efficiency may become critical if financial statement reporting expands as a result of new innovations such as Big Data and continuous reporting. In the future, users may be able to electronically connect to financial statement data that firms are maintaining on a perpetual basis on the SEC website and continuously monitor and analyze the financial statement data dynamically in real time. If so, then unquestionably, XBRL will have played a critical role in bringing about this future innovation. Originality/value Whereas previous studies have utilized Summary IBES data to assess the impact of XBRL on analyst forecasts, the authors use Detail IBES to study the effects of XBRL adoption directly by measuring days from 10-K and 10-Q file dates in Compustat to each estimate’s announcement date recorded in IBES and by computing the per cent error using each estimate’s VALUE and ACTUAL recorded in Detail IBES. The authors are the first to evidence a significant shortening in average days and an increase in per cent of 30-day counts in the zero- to 15-day timeframe immediately following the fillings of 10-K s and 10-Qs.
4
Kalra, Rajiv. "Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10-Q Filings." CFA Digest 33, no. 2 (May 2003): 29–30. http://dx.doi.org/10.2469/dig.v33.n2.1263.
5
Balsam, Steven, Eli Bartov, and Carol Marquardt. "Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10-Q Filings." Journal of Accounting Research 40, no. 4 (September 2002): 987–1012. http://dx.doi.org/10.1111/1475-679x.00079.
6
Huddart, Steven, Bin Ke, and Charles Shi. "Jeopardy, non-public information, and insider trading around SEC 10-K and 10-Q filings." Journal of Accounting and Economics 43, no. 1 (March 2007): 3–36. http://dx.doi.org/10.1016/j.jacceco.2006.06.003.
7
Stuart, Iris C., and Vijay Karan. "eToys Inc.: A Case Examining Pro Forma Financial Reports, Analysts' Forecasts, and Going Concern Disclosures." Issues in Accounting Education 18, no. 2 (May 1, 2003): 191–209. http://dx.doi.org/10.2308/iace.2003.18.2.191.
Abstract:
This case is designed to provide you with the opportunity to examine several reporting issues, in the period between an IPO and bankruptcy filing, for a “dotcom” company that failed. You will consider the information provided to outside users of financial statements in several company reporting mechanisms including the financial disclosures made by the company in its 10-Q and 10-K filings to the SEC, the pro forma earnings reported in press releases, and the information available to the public to evaluate a going concern assumption. Further, you will also examine the impact of analysts' forecasts on management's release of financial information to the public.
8
Filzen, Joshua J. "The Information Content of Risk Factor Disclosures in Quarterly Reports." Accounting Horizons 29, no. 4 (June 1, 2015): 887–916. http://dx.doi.org/10.2308/acch-51175.
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SYNOPSIS I examine whether recently required risk factor update disclosures in quarterly reports provide investors with timely information regarding potential future negative economic events. Specifically, I examine whether risk factor updates in 10-Q filings are associated with negative abnormal returns at the time the updates are disclosed and whether quarterly updates are followed by negative earnings shocks. I find that firms presenting updates to their risk factor disclosures have significantly lower abnormal returns around the filing date of the 10-Q relative to firms without updates. I also find that firms with updates to their risk factors section have significantly lower future unexpected earnings and are more likely to experience future extreme negative earnings shocks. These findings suggest that the recent disclosure requirement mandated by the SEC was successful in generating timely disclosure of bad news. JEL Classifications: M41; M48; D80; G18. Data Availability: Please contact the author for data availability.
9
Lawrence, Alastair, James P. Ryans, and Estelle Y. Sun. "Investor Demand for Sell-Side Research." Accounting Review 92, no. 2 (July 1, 2016): 123–49. http://dx.doi.org/10.2308/accr-51525.
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ABSTRACT We use daily page views of analyst estimates, ratings, and target prices on Yahoo Finance to understand when users seek sell-side analyst research. Demand for this information is most pronounced on days with earnings announcements, management guidance, and All-Star analyst reports. Surprisingly, demand does not increase at Form 10-K and Form 10-Q filings. While the overall demand for analyst estimates is 19.9 percent less than for analyst ratings and target prices, on earnings announcement and management guidance days, this preference is reversed. Moreover, the demand for analyst information substantially trumps that of SEC filings and financial statement information. JEL Classifications: M41; G14; G24.
10
Krishnan, Jagan, and Yinqi Zhang. "Auditor Litigation Risk and Corporate Disclosure of Quarterly Review Report." AUDITING: A Journal of Practice & Theory 24, s-1 (December 1, 2005): 115–38. http://dx.doi.org/10.2308/aud.2005.24.s-1.115.
Abstract:
The U.S. Securities and Exchange Commission (SEC) recently made timely reviews of quarterly financial statements mandatory for all registrants. The objective is to improve corporate quarterly reporting. However, formal review reports are not required to be included in 10-Q filings, and may not even be issued by auditors. A priori, one would expect these reports to be useful to investors if they imply added auditor diligence or if they contain modifications to the standard report. We find that only 5.7 percent of the companies in our sample attached the auditor's review report in their 10-Q filings. Also the majority of these reports are “clean,” suggesting that clients may not be disclosing the reports when they are modified. After controlling for factors such as auditor type, agency costs, capital market transactions, and company size, we find a significant negative association between auditors' litigation risk and disclosure of the review report. In addition, we find that the disclosure of the review report is associated with auditor type and company size.
11
Weirich, Thomas R., and Lori Olsen. "An Analysis and Taxonomy of Disclosure Controls and Procedures Effectiveness." Current Issues in Auditing 10, no. 2 (May 1, 2016): A28—A37. http://dx.doi.org/10.2308/ciia-51480.
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SUMMARY With the passage of the Sarbanes-Oxley Act, there has been much discussion and analysis of Section 404 dealing with management's and the external auditor's evaluation of internal controls over financial reporting (ICFR). However, Section 302 of the Act requires management to evaluate their disclosure controls and procedures (DC&P) and report on the effectiveness of such controls in their 10-Q and 10-K filings. This paper explains the SEC's differentiation of ICFR and DC&P and attempts to report on the effectiveness of DC&P utilizing the Audit Analytics database. The data show that DC&P have been ineffective, as reported by management in their 10-K filings, ranging from a low of 13.75 percent to a high of 33.91 percent of observations over the 11-year period from 2004 through 2014. The paper concludes with potential research issues related to DC&P.
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Chipalkatti, Niranjan, Massimo DiPierro, Carl Luft, and John Plamondon. "Loan fair values and the financial crisis." Journal of Risk Finance 21, no. 5 (August 6, 2020): 559–76. http://dx.doi.org/10.1108/jrf-04-2020-0081.
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Purpose In 2009, effective the second-quarter, the financial accounting standards board mandated that all banks need to disclose the fair value of loans in their 10-Q filings in addition to their 10-K filings. This paper aims to investigate whether these disclosures reduced the level of information asymmetry about the riskiness of bank loan portfolios during the financial crisis. Design/methodology/approach The paper examines the impact of these disclosures on the bid-ask spread of a panel of 246 publicly traded bank holding companies. The spread serves as a proxy for information asymmetry and the ratio of the fair value of a bank’s loan portfolio to its book value is a proxy for the credit and liquidity risk associated with the same. The reaction to the first-quarter filing serves as a control to assess the reaction at the time of the second-quarter filing. Findings There is a significant negative association between bid-ask spread and the ratio indicating that the fair value information was useful in reducing information asymmetry during the financial crisis. A pattern was observed in the information dissemination related to the fair value of loans that is consistent with the literature that documents a delayed investor reaction to complex financial information. Originality/value Investors may use the fair value information to better assess the risk profile of a BHC’s loan portfolio. Also, loan fair values provide managers with data to better implement stress test models and determine optimal capital buffers.
13
Krishnan, Jayanthi, and Joon S. Yang. "Recent Trends in Audit Report and Earnings Announcement Lags." Accounting Horizons 23, no. 3 (September 1, 2009): 265–88. http://dx.doi.org/10.2308/acch.2009.23.3.265.
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SYNOPSIS: The Securities and Exchange Commission introduced accelerated filing requirements for corporate 10-K and 10-Q filings in 2003. The major accounting firms and some companies expressed concerns about the acceleration, arguing that other changes in financial reporting and disclosure requirements, corporate governance, and auditing standards would make it difficult to meet the shorter deadlines while maintaining good quality reporting. Using longitudinal samples of companies for the period 2001–2006, we examine two lags in the corporate reporting process: the audit report lag (the number of days between the fiscal year-end and the audit report date), and the earnings announcement lag (the number of days between the fiscal year-end and the earnings announcement date). Our results indicate that both lags increased significantly in the two-year period 2001–2002 prior to the introduction of the accelerated filing requirements and in the period 2003–2006 when the new filing requirements were in effect. Furthermore, when we examine the sample of companies for which both the audit lag and earnings announcement lags are available, we find that the likelihood that companies announced earnings prior to the audit report date increased considerably over the period 2001–2006, but particularly during 2004–2006 when Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) was in effect. Thus it appears that an unintended consequence of recent policy changes is that companies are less likely to wait for completion of their audits to announce earnings. We also examine the quality of reporting (measured by absolute discretionary accruals and quality of accruals) for the sample period. We find that long audit report lags (or 10-K filings lags) were not associated with lower quality of earnings or accruals (except for a mild effect in 2004), providing no support for the concern that companies that have to rush to meet the deadlines may suffer a loss of reporting quality. However, when we examine potential reporting quality effects of early earnings announcements, we find some mild evidence that for those companies that made earnings announcements several days in advance of completion of their audits, the quality of earnings/accruals was lower in some years during the period 2003–2006.
14
Boritz, J. Efrim, and Won Gyun No. "Assurance on XBRL-Related Documents: The Case of United Technologies Corporation." Journal of Information Systems 23, no. 2 (September 1, 2009): 49–78. http://dx.doi.org/10.2308/jis.2009.23.2.49.
Abstract:
ABSTRACT: The eXtensible Business Reporting Language (XBRL) was developed to provide financial information users with a standardized method to prepare, publish, and exchange business information in digital format. XBRL is being used around the world for financial reporting and government e-filings. Although there has been growing awareness about assurance issues related to the use of XBRL, current audit practices and standards fall short of providing the needed guidance for the provision of assurance on XBRL-Related Documents. In this paper, we report on a mock assurance engagement that we conducted on the XBRL-Related Documents of United Technologies Corporation's 10-Q for the third quarter of 2005 and repeated on its 10-Q for the third quarter of 2008 to identify the issues that companies and auditors might encounter if they are requested to provide assurance on XBRL-Related Documents. We describe the assurance framework applied in the mock assurance engagement, present the findings from the examination process, and discuss future research opportunities associated with XBRL documents assurance.
15
Cao, Likun, and Jie Ren. "Machine learning shows that the Covid-19 pandemic is impacting U.S. public companies unequally by changing risk structures." PLOS ONE 17, no. 6 (June 22, 2022): e0269582. http://dx.doi.org/10.1371/journal.pone.0269582.
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Covid-19 has impacted the U.S. economy and business organizations in multiple ways, yet its influence on company fundamentals and risk structures have not been fully elucidated. In this paper, we apply LDA, a mainstream topic model, to analyze the risk factor section from SEC filings (10-K and 10-Q), and describe risk structure change over the past two years. The results show that Covid-19 has transformed the risk structures U.S. companies face in the short run, exerting excessive stress on international interactions, operations, and supply chains. However, this shock has been waning since the second quarter of 2020. Our model shows that risk structure change (measured by topic distribution) from Covid-19 is a significant predictor of lower performance, but smaller companies tend to be stricken harder.
16
Kim, Joung W., Jee-Hae Lim, and Won Gyun No. "The Effect of First Wave Mandatory XBRL Reporting across the Financial Information Environment." Journal of Information Systems 26, no. 1 (March 1, 2012): 127–53. http://dx.doi.org/10.2308/isys-10260.
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ABSTRACT This study examines the effect of mandatory XBRL disclosure across various aspects of the financial information environment. Our findings show an increase in information efficiency, a decrease in event return volatility, and a reduction of change in stock returns volatility for 428 firms (1,536 10-K and 10-Q filings) post-XBRL disclosure. In addition, this study shows that XBRL mitigates information risk in the market, especially when there is increased uncertainty in the information environment. Our results are robust to various alternative specifications and research modifications, such as a matched-pair control (326 XBRL versus 326 non-XBRL firms), current stock market condition, potential earnings releases, and corporate governance. This study contributes to the literature by systematically documenting evidence of how mandatory XBRL disclosure decreases information risk and information asymmetry in both general and uncertain information environments. Our evidence could potentially assist the SEC in their effort to expeditiously assess the benefits of XBRL. Data Availability: The list of firms used in the study is available from Professor Lim upon request. All other data are available from sources identified in the body of the paper.
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Henderson, Raymond, Declan French, Elaine Stewart, Dave Smart, Adam Idica, Jordan Clark, Markus Eckstein, and Mark Lawler. "Does the precision oncology medicine development pathway deliver value for health systems?" Journal of Clinical Oncology 39, no. 15_suppl (May 20, 2021): e18818-e18818. http://dx.doi.org/10.1200/jco.2021.39.15_suppl.e18818.
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e18818 Background: While there is increasing evidence that precision cancer medicines (PCMs) can be more effective than “one-size-fits-all” (OSFA) oncology medicines, questions persist as to their cost, availability, and overall patient benefit. We determined whether using a PCM approach to medicines discovery/development delivers medicines within cost constraints of health systems. R&D costs of developing a medicine are a subject of debate, with average estimates ranging from $314 million (M) - $2.8 billion (B). Methods: Data on oncology medicines approved (2011-2020) by the US Food and Drug Administration (FDA) were analyzed, employing two approaches to estimate R&D costs to bring the medicine to market: (i) Securities and Exchange Commission (SEC) data were compiled from 10-K and 10-Q financial performance filings on the medicine’s development cost through its R&D lifetime. (ii) Employing a base figure of $100,271 (the estimated cost per patient in a phase III clinical trial), costs were calculated, based on data from clinicaltrials.gov. Trial data were split into clinical trial phases and probability of trial success calculated, along with preclinical costs. Cost-of-capital (CoC) approach was applied and if appropriate an orphan drug tax credit (ODTC) was subtracted from the total. Results: 19 PCMs and 11 OSFA oncology drugs listed by the National Cancer Institute which had complete data were analyzed from 22 companies (Table). Initial costs from SEC data suggest a 50% reduced development spend for PCM, ($605M; range = $181M-$1.1B) (Clinical Trial Modelling Analysis: $604M ($63M-$2.29B)), compared to an OSFA oncology drug development spend ($877M; $333M-$3.34B) (Modelling Analysis: $597M ($41M-$1.64B)). Once preclinical costs were added total R&D costs capitalized and ODTC subtracted, there was an 83% increase in costs, from $2.44B ($614M-$5.23B) (Modelling Analysis: $3.1B ($209M-$11.52 B)) for PCMs to $4.46B ($1.59-$14.9B) (Modelling Analysis: $3.92B ($282-$12.74B) for OSFA oncology drugs. SEC data are more accurate, as they capture real data, rather than modelling assumptions. Conclusions: Our results provide an estimate of the R&D spend required to bring an oncology medicine to market. R&D cost of a PCM is below the top range of prior estimates published, while R&D cost of an OSFA oncology medicine is almost twice the cost of a PCM, emphasizing the potential for PCM treatments to deliver care at greater value to patients and health systems.[Table: see text]
18
Yen, Ju-Chun, and Tawei Wang. "The Association between XBRL Adoption and Market Reactions to Earnings Surprises." Journal of Information Systems 29, no. 3 (January 1, 2015): 51–71. http://dx.doi.org/10.2308/isys-51039.
Abstract:
ABSTRACT This paper investigates whether the adoption of XBRL is associated with market reactions to earnings surprises around 10-Q and 10-K filing dates based on a sample of XBRL filers in all three phases. Our main findings demonstrate that the adoption of XBRL is positively associated with market reactions to earnings surprises around 10-Q and 10-K filing dates only for Phase II, not for Phase I, filers except when a Phase I filer is followed by fewer analysts. The full-sample test shows that the hypothesized effect also exists for Phase III filers, and we observe an increase in market reaction for Phase II filers after their second year of adoption. We believe this study has policy implications and may alleviate firms' concerns regarding the benefits of adopting XBRL. JEL Classifications: M41. Data Availability: All data are publicly available.
19
Khalil, Samer, Sattar Mansi, Mohamad Mazboudi, and Andrew (Jianzhong) Zhang. "Bond Market Reaction to Untimely Filings of 10-K and 10-Q Reports." SSRN Electronic Journal, 2017. http://dx.doi.org/10.2139/ssrn.3038837.
20
Hao, Jie, and Viet Tuan Pham. "COVID-19 Disclosures and Market Uncertainty: Evidence from 10-Q Filings." SSRN Electronic Journal, 2022. http://dx.doi.org/10.2139/ssrn.4024556.
21
Hao, Jie, and Viet T. Pham. "COVID‐19 Disclosures and Market Uncertainty: Evidence from 10‐Q Filings." Australian Accounting Review, March 7, 2022. http://dx.doi.org/10.1111/auar.12369.
22
Bartov, Eli, Steven Balsam, and Carol A. Marquardt. "Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10-Q Filings." SSRN Electronic Journal, 2000. http://dx.doi.org/10.2139/ssrn.232721.
23
Huddart, Steven J., Bin Ke, and Charles Shi. "Jeopardy, non-public information, and insider trading around SEC 10-K and 10-Q filings." SSRN Electronic Journal, 2005. http://dx.doi.org/10.2139/ssrn.756124.
24
Kim, Hyogon, Eunmi Lee, and Donghee Yoo. "Do SEC filings indicate any trends? Evidence from the sentiment distribution of forms 10-K and 10-Q with FinBERT." Data Technologies and Applications, February 24, 2023. http://dx.doi.org/10.1108/dta-05-2022-0215.
Abstract:
PurposeThis study quantified companies' views on the COVID-19 pandemic with sentiment analysis of US public companies' disclosures. The study aims to provide timely insights to shareholders, investors and consumers by exploring sentiment trends and changes in the industry and the relationship with stock price indices.Design/methodology/approachFrom more than 50,000 Form 10-K and Form 10-Q published between 2020 and 2021, over one million texts related to the COVID-19 pandemic were extracted. Applying the FinBERT fine-tuned for this study, the texts were classified into positive, negative and neutral sentiments. The correlations between sentiment trends, differences in sentiment distribution by industry and stock price indices were investigated by statistically testing the changes and distribution of quantified sentiments.FindingsFirst, there were quantitative changes in texts related to the COVID-19 pandemic in the US companies' disclosures. In addition, the changes in the trend of positive and negative sentiments were found. Second, industry patterns of positive and negative sentiment changes were similar, but no similarities were found in neutral sentiments. Third, in analyzing the relationship between the representative US stock indices and the sentiment trends, the results indicated a positive relationship with positive sentiments and a negative relationship with negative sentiments.Originality/valuePerforming sentiment analysis on formal documents like Securities and Exchange Commission (SEC) filings, this study was differentiated from previous studies by revealing the quantitative changes of sentiment implied in the documents and the trend over time. Moreover, an appropriate data preprocessing procedure and analysis method were presented for the time-series analysis of the SEC filings.
25
Chen, Wen, Haibin Wu, and Liandong Zhang. "Terrorist Attacks, Managerial Sentiment, and Corporate Disclosures." Accounting Review, July 2, 2020. http://dx.doi.org/10.2308/tar-2017-0655.
Abstract:
This study investigates the effect of managerial sentiment on corporate disclosure decisions. Using terrorist attacks in the United States as adverse shocks to managerial sentiment, we find that firms located in the metropolitan areas attacked issue more negatively biased earnings forecasts. The effect is stronger for firms with higher operating uncertainty and firms with younger, inexperienced, or less confident executives and it is weaker for firms located in states with increasing violent crime rates. A potential alternative explanation is that managers strategically bias earnings forecasts downward and attribute the poor performance to terrorist attacks. To address this issue, we conduct a battery of additional analyses and find results more consistent with managerial sentiment than strategic attribution. In addition, we show that our results are unlikely to be driven by any economic effects of terrorist attacks. Finally, firms in attacked areas exhibit a more pessimistic tone in 10-K/10-Q filings.
26
Belina, Hambisa, K. Raghunandan, and Dasaratha V. Rama. "Do Shareholders Care about “Surprise” Internal Control Weakness Disclosures?" Current Issues in Auditing, August 18, 2023, A1—A8. http://dx.doi.org/10.2308/ciia-2023-002.
Abstract:
SUMMARY Prior research shows that many of the companies that disclose material weaknesses in internal control (MWs) do not disclose such weaknesses in earlier quarterly 10-Q filings for the same year—i.e., the year-end MW disclosures are “surprise” disclosures. We find that shareholders at accelerated filers with surprise MW disclosures are more likely to vote against auditor ratification (by a factor of about 1.4 times) than at companies with “no-surprise” MW disclosures. These findings suggest that shareholders may at least partly blame auditors and hold them responsible for the surprise MW disclosures. Internal control disclosures necessarily involve professional judgment, but the results indicate that for shareholders, earlier disclosure of such problems is preferable to waiting until the year-end (and perhaps hoping that the problems will be resolved).
27
Henderson, Raymond H., Declan French, Elaine Stewart, Dave Smart, Adam Idica, Sandra Redmond, Markus Eckstein, et al. "Delivering the precision oncology paradigm: reduced R&D costs and greater return on investment through a companion diagnostic informed precision oncology medicines approach." Journal of Pharmaceutical Policy and Practice 16, no. 1 (July 5, 2023). http://dx.doi.org/10.1186/s40545-023-00590-9.
Abstract:
Abstract Background Precision oncology medicines represent a paradigm shift compared to non-precision oncology medicines in cancer therapy, in some situations delivering more clinical benefit, and potentially lowering healthcare costs. We determined whether employing a companion diagnostic (CDx) approach during oncology medicines development delivers effective therapies that are within the cost constraints of current health systems. R&D costs of developing a medicine are subject to debate, with average estimates ranging from $765 million (m) to $4.6 billion (b). Our aim was to determine whether precision oncology medicines are cheaper to bring from R&D to market; a secondary goal was to determine whether precision oncology medicines have a greater return on investment (ROI). Method Data on oncology medicines approved between 1997 and 2020 by the US Food and Drug Administration (FDA) were analysed from the Securities and Exchange Commission (SEC) filings. Data were compiled from 10-K, 10-Q, and 20-F financial performance filings on medicines’ development costs through their R&D lifetime. Clinical trial data were split into clinical trial phases 1–3 and probability of success (POS) of trials was calculated, along with preclinical costs. Cost-of-capital (CoC) approach was applied and, if appropriate, a tax rebate was subtracted from the total. Results Data on 42 precision and 29 non-precision oncology medicines from 56 companies listed by the National Cancer Institute which had complete data available were analysed. Estimated mean cost to deliver a new oncology medicine was $4.4b (95% CI, $3.6–5.2b). Costs to bring a precision oncology medicine to market were $1.1b less ($3.5b; 95% CI, $2.7–4.5b) compared to non-precision oncology medicines ($4.6b; 95% CI, $3.5–6.1b). The key driver of costs was POS of clinical trials, accounting for a difference of $591.3 m. Additional data analysis illustrated that there was a 27% increase in return on investment (ROI) of precision oncology medicines over non-precision oncology medicines. Conclusion Our results provide an accurate estimate of the R&D spend required to bring an oncology medicine to market. Deployment of a CDx at the earliest stage substantially lowers the cost associated with oncology medicines development, potentially making them available to more patients, while staying within the cost constraints of cancer health systems.
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Desai, Hrishikesh. "Are Firms Biasing Stakeholder Expectations by Attributing Prior Poor Performance to COVID-19?" IIM Kozhikode Society & Management Review, January 28, 2022, 227797522110612. http://dx.doi.org/10.1177/22779752211061207.
Abstract:
Item 503(c) of the United States Securities and Exchange Commission’s (SEC’s) Regulation S-K requires firms to disclose the ‘most significant’ factors that affect them in their Item 1A risk factor disclosures made in their 10-K (annual) or 10-Q (quarterly) SEC filings. Prior to COVID-19, firms discussed risk factors such as liquidity, competition, etc. as part of their Item 1A disclosures. The current pandemic has resulted in the COVID-19 risk factor being widely discussed as part of firms’ Item 1A risk factor disclosures. A ‘firm-specific’ discussion on this transient risk factor is unique in the sense that it can affect the salience of other, already disclosed, less transient but significant risk factors to investors and other stakeholders. Using a sample of 68 firms hard hit by COVID-19 with prior poor performance, I find that market reactions to their Item 1A risk factor disclosures were significantly more positive for firms that disclosed the COVID-19 risk factor in a certain firm-specific manner compared to those that didn’t. These results suggest that stakeholder perceptions of firms’ risk profiles are being biased to some extent as the less transient but other significant risk factors that were already affecting these firms seem to be underweighted by them in evaluating the firms’ risk profiles. I explain this bias further using the meta-theoretical framework of the elaboration likelihood model. I also propose a solution to this problem that involves making these disclosures in the form of risk matrices. JEL Classifications: G38, M10, M40, M41, M48
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Coyne, Joshua G., Kevin Kim, and Sangwan Kim. "The Interplay between Information Acquisition and Information Integration: Evidence from SEC 10-K/10-Q Filing Dates." SSRN Electronic Journal, 2021. http://dx.doi.org/10.2139/ssrn.3957634.