The Information Content of Discretionary Disaggregation
Author(s)
Anderson, Samuel S.
DownloadThesis PDF (711.6Kb)
Advisor
So, Eric C.
Terms of use
Metadata
Show full item recordAbstract
I examine the information content embedded in firms' decision to disaggregate financial statement line items. I find that the level of disaggregation predicts both current and future performance. I also find that significant changes in discretionary disaggregation are indicative of weak fundamentals. In particular, I document a hump-shaped pattern such that both increases and decreases in discretionary disaggregation are negatively associated with measures of performance. Investors do not unravel this information at the time of filing, resulting in predictable return patterns over time. Together, these findings are consistent with discretionary disaggregation providing an informative-but low saliency-signal regarding firms' fundamental performance.
Date issued
2022-02Department
Sloan School of ManagementPublisher
Massachusetts Institute of Technology