Simon S.M. Ho
The Chinese University of Hong Kong
Kar Shun Wong
The Chinese University of Hong Kong
Abstract: This paper investigates the perceptions of both preparers (chief finance officers) and external users (financial analysts) of the values of selected voluntary disclosure items and compares these perceptions with the actual disclosure practice by preparer firms. Based on a survey of 98 CFOs and 92 financial analysts in Hong Kong, it was found that, in voluntary disclosures, preparers perceived that the potential benefit of share price improvement is significantly larger than that of reducing cost of capital, while the preparation cost was not significantly different from the cost of possible loss of competitive advantage. Among the 35 voluntary disclosure items, there was no association between preparers' net benefits and users' perceived importance. Although there was a significant positive relationship between perceived net benefits and the actual disclosure percentage by firms, there was no such correlation between users' perceived importance and firms¡¦ disclosure percentage. Therefore, preparers are influenced more by their own cost-benefit concerns in disclosure decisions, not user requirements. The implications of these findings for theory, research and practice are discussed.
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