Title: Does financial crisis affect financial reporting of good news and bad news?

Authors: Mohammad Said Ressas; Khaled Hussainey

Addresses: 13 Torkington Road, Gately, Cheadle, Cheshire SK84PR, UK ' Plymouth Business School, University of Plymouth, 405H Cookworthy Building, Plymouth, PL4 8AA, UK; Department of Accounting & Auditing, Faculty of Commerce, Ain Shams University, Cairo, Egypt

Abstract: The objective of this paper is to examine the impact of financial crisis on financial reporting of good news and bad news in the UK annual report narrative sections. We use the manual content analysis to measure levels of good news and bad news information for a sample of 110 chairman statements of financial institutions. Our sample covers a five year period (2006-2010), which represents the global financial crisis year (2008), two years before the crisis and two years after the crisis. Our regression analysis shows that UK financial companies disclose more good news information than bad news information. We also find that the crisis affects the financial reporting of good news and bad news. These results suggest that after controlling for other firm characteristics and corporate governance mechanisms, UK financial companies disclose more bad news information during and after the crisis period, while they disclose less good news during these periods.

Keywords: financial reporting; good news; bad news; narrative disclosure; voluntary disclosure; chairman statements; global financial crisis; UK; United Kingdom; annual reports; firm characteristics; corporate governance.

DOI: 10.1504/IJAAPE.2014.066393

International Journal of Accounting, Auditing and Performance Evaluation, 2014 Vol.10 No.4, pp.410 - 429

Received: 13 Aug 2013
Accepted: 14 Feb 2014

Published online: 27 Dec 2014 *

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