TY -  JOUR
PY -  2018
SN -  2036-6779
T1 -  Do letters to shareholders inform or mislead? Insights from insider trading
JO -  FINANCIAL REPORTING
DA -  10/15/2018 12:00:00 AM
DO -  10.3280/FR2018-002004
UR -  http://www.francoangeli.it/Riviste/Scheda_rivista.aspx?idArticolo=62571
AU -  Bozzolan, Saverio
AU -  Mattei, Marco
AU -  Laghi, Enrico
AU -  Beccalli, Elena
SP -  73
EP -  109
IS -  2
VL -  
LA -  EN
AB -  Empirical studies consistently provide evidence that investors perceive qualitative disclosures as useful because they have significant effects on analysts’ forecast revisions and a firm’s share price. But these results leave unanswered the question of whether managers write qualitative disclosures to inform or mislead investors. Based on the signaling theory, we consider two actions by the same manager: one (insider trading) is a costly signal whilst the other (qualitative disclosure) is the cheap signal. We then verify whether they are coherent. We investigate the content and the verbal tone of the Letter of Shareholders and the insider trading from its author before and after the letter’s date of release and find that the costly signal (the insider trading) is not coherent with the cheap signal (the disclosure). This finding indicates that managers do not use qualitative disclosures to offer incremental information but that they might use them to mislead investors.
PB -  FrancoAngeli
ER -