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DO FIRMS’ BANKRUPTCY ANNOUNCEMENTS ALTER PEERS’ RISK FACTOR DISCLOSURES?
| Title: | DO FIRMS’ BANKRUPTCY ANNOUNCEMENTS ALTER PEERS’ RISK FACTOR DISCLOSURES?. |
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| Name(s): |
Nam, Jiwon, author Kohlbeck, Mark , Thesis advisor Florida Atlantic University, Degree grantor School of Accounting College of Business |
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| Type of Resource: | text | |
| Genre: | Electronic Thesis Or Dissertation | |
| Date Created: | 2023 | |
| Date Issued: | 2023 | |
| Publisher: | Florida Atlantic University | |
| Place of Publication: | Boca Raton, Fla. | |
| Physical Form: | application/pdf | |
| Extent: | 135 p. | |
| Language(s): | English | |
| Abstract/Description: | Since 2005 corporate managers must discuss their firm’s significant risk factors that may materially and unfavorably affect corporate outcomes in the Item 1A Risk Factor Disclosure (RFD) section of their 10-K filings. However, there is limited research on whether firms change the sentiment of their mandatory disclosures after a significant economic event. I use bankruptcy announcements as a unique setting in this study to assess non-announcing firms’ responses to these events as a bankruptcy announcement generates significant concern to non-announcing industry peer firms. I explore whether industry peers change four measures of sentiment (i.e., length, negative tone, specificity, forward-looking statements) of Item 1A RFDs after a rival firm’s bankruptcy filing. Using textual analysis methodology, I find that industry peer firms have shorter, less negative, and less forward-looking RFDs after another firm’s bankruptcy announcement. These results imply that industry peers are likely to adjust their tone of mandatory filings (i.e., Item 1A RFDs) in response to a rival firm’s bankruptcy announcement. I further provide evidence that firms do not use separate subsections to disclose their firm- and industry-specific risks within their Item 1A RFDs. Lastly, the lengths of financial, litigation, other-idiosyncratic, and other-systematic topic disclosures significantly decrease for non-announcing industry peers while the length of tax relevant risk topic does not significantly change after a bankruptcy filing. This study adds to mandatory research by identifying the spillover effect of a bankruptcy announcement on Item 1A RFDs. This research also contributes to accounting literature by providing evidence that non-announcing industry peers significantly adjust the sentiment of their risk factor information. Market participants including investors, shareholders, and financial analysts can improve investment decision accuracy by analyzing the industry peers’ risk factor information. | |
| Identifier: | FA00014189 (IID) | |
| Degree granted: | Dissertation (PhD)--Florida Atlantic University, 2023. | |
| Collection: | FAU Electronic Theses and Dissertations Collection | |
| Note(s): | Includes bibliography. | |
| Subject(s): |
Bankruptcy Risk Accounting Disclosure in accounting |
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| Persistent Link to This Record: | http://purl.flvc.org/fau/fd/FA00014189 | |
| Use and Reproduction: | Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. | |
| Host Institution: | FAU | |
| Is Part of Series: | Florida Atlantic University Digital Library Collections. |
