The value relevance of forward looking disclosure : a content analysis of the annual reports of egyptian listed companies

الملخص EN

Forward-looking financial disclosure (FLD) is intended to be value relevant to capture information about company's future performance.

However, a concern often arises over the boilerplate, storytelling, bias, and the auditing nature of FLD.

This study aims to examine the measure of FLD in Egyptian corporate annual reports using automated content analysis technique.

Second, is to identify the main FLD determinants.

Finally, it examines the impact of FLD on firm value.

The study uses a sample of Egyptian narrative statements in the annual reports over the period from 2008 to 2016.

The final sample comprised 360 observations of listed non-financial companies in Egypt and two empirical regression models are used.

FLD was measured by the number of sentences coded as containing both Egyptian forward looking and financial keywords.

Firm value for listed companies was measured by Tobin's Q.

The study finds company's size, leverage market risk, industry type, dividend policy, and competitive environment are the main firm-level determinants of FLD, while, auditor type is the main governance-level determinant of FLD in Egypt.

Further, findings also reveal an association between the level of FLD and firm value.

The results suggest that forward-looking financial information is value relevant about company performance and complements financial statements in Egypt.

The managers, investors, external auditors, regulators and researchers should pay more attention to economic consequences of FLD, and how to deliver signals and information more understandably and readably for stakeholders.

This research adds to the literature related to automated content analysis of narratives, and firm value for listed companies.

The results enrich agency, signalling, stakeholders, communication and dividend theories