Seminar – Does voluntary non-earnings disclosure substitute for redacted proprietary contract information?

Mary Barth, Professor of Accounting, Stanford University

This study finds that voluntary non-earnings disclosures substitute for redacted proprietary contract information. When firms redact contract information, they provide more voluntary disclosures and have higher information uncertainty and asymmetry. Although firms provide both voluntary non-earnings and earnings disclosures when they redact contract information, only non-earnings disclosures in Forms 8-K mitigate the higher information uncertainty and asymmetry associated with redaction. These findings suggest earnings disclosures may not be specific enough to substitute for redacted contract information and contrast with the presumption in related research that firms provide earnings disclosures to substitute for withheld proprietary information. Our inferences particularly apply to research and development and license contracts, which are more likely to contain proprietary information that also is relevant to investors. Taken together, our study’s evidence can be informative to the SEC in its consideration of the effects of reducing mandatory disclosure on information available to investors

Speaker bio

Mary E. Barth is the Joan E. Horngren Professor of Accounting, Emerita at the Stanford University, Graduate School of Business (GSB). Prior to joining the faculty at Stanford in 1995, she was an Associate Professor at Harvard Business School and an audit partner in Arthur Andersen & Co.

Professor Barth’s research is published in a variety of journals and has won several awards, including the American Accounting Association’s (AAA) Notable Contributions to Accounting Literature Award, the AAA’s Competitive Manuscript Award, and, on three occasions each, the AAA/Deloitte Wildman Medal Award and the Best Paper Award of the Financial Accounting and Reporting Section of the AAA.

She is Senior Editor of The Accounting Review and has previously served as an Editor. She has been the Accounting Department Editor of Management Science and Co-editor of the Journal of Financial Reporting, and served on the Editorial Boards of several other academic journals.

Professor Barth is a recipient of the GSB’s MBA Distinguished Teaching Award, MSx Teaching Excellence Award, PhD Faculty Distinguished Service Award, and Robert J. Davis Award for a lifetime of service as a GSB faculty member. She served as a Senior Associate Dean for Academic Affairs at the GSB from 2002 until 2009.

For more information, please contact Emily Brown.