The Determinants of Forward-Looking Information in Management Commentary: Evidence from Italian Listed Companies

  •  Elisa Menicucci    


The aim of this paper is to assess the level of forward-looking information in Management Commentaries of Italian listed companies and to empirically explore the firm characteristics that may affect the extent of forward-looking information disclosed. A disclosure index composition consisting of 15 forward-looking information items is developed to investigate the level of forward-looking information in Management Commentaries of a sample of companies listed on Italian Stock Exchange for the year 2010. Using content analysis the study confirms that these companies are reluctant to provide forward-looking information in Management Commentaries. Three hypotheses are proposed and six models are tested within a regression analysis in order to explore the effect of three main variables (firm size, profitability and leverage) on forward-looking information. The results show that profitability has significant association with the level of specific types of forward-looking information. Conversely, firm size and leverage are found to be insignificant in explaining the level of forward-looking information.

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