Voluntary disclosure of intangibles and analysts’ earnings forecasts and recommendations

Purpose - The purpose of this paper is to investigate the relationship between voluntary disclosure of intangibles and financial analysts’ earnings forecasts properties. Design/methodology/approach - Disclosures about intangible assets were hand-collected through content analysis of annual reports of a sample of US non-financial firms, while analysts’ earnings forecasts properties were collected from Bloomberg Professional database. The authors relied on correlation and multivariate regression analyses to test the research hypotheses. Findings - The results show that increased intangible disclosures affect analysts’ earnings forecasts accuracy, dispersion, and favourable consensus recommendations. However, this effect varies according to the nature of intangible assets. Practical implications - The results may be of interest to different market participants such as corporate managers, financial analysts, and standards setting bodies that recently published guidelines on voluntary disclosure of intangibles. Originality/value - This study develops a new comprehensive index to measure the content of narrative disclosures about a large number of intangibles, such as human, structural, and relational assets. The findings contribute to the current debate on the value-relevance of narrative disclosures on intangibles to investors and financial analysts.