Mitigating Information Asymmetry, Strategic Disclosure and Manipulating Numbers

Niko Kivimäki

Research output: ThesisDoctoral ThesisCollection of Articles


This thesis tells about corporate disclosure and financial reporting decisions when uncertainty related to firm's investments is high. It observes managerial information disclosure to investors using perspectives on management's voluntary guidance, strategic disclosure decision making and earnings manipulation. The three essays of this thesis examine R&D-intensive firms, where the uncertainty related to R&D investments and the need for information is high, and where disclosure and financial reporting has particularly important role.The first essay of the thesis contributes to the management's voluntary guidance branch of disclosure research, examining disclosure of information beyond requirements such as GAAP and Securities and Exchange Commission rules. The essay examines informativeness and bias of the voluntary disclosure, and the quality of the disclosure. I find that R&D expenditure guidance is issued to mitigate information asymmetry between manager and investors, but also that the guidance is not as high quality as previous studies on management's forecasts would suggest. The second essay of the thesis contributes to the disclosure literature examining the motives of managers' strategic disclosure decision making. Strategic disclosure takes place when a manager exercises discretion to disclose or withhold information, for example by delaying bad news disclosure and disclosing more good news than bad news. When the information asymmetry is high, the likelihood to make strategic disclosure decisions may be higher.I find in the second essay that management is more likely to stop nonquantitative and discretionary guidance when the guidance would convey bad news, and that the investor's monitoring level is affecting managers' decisions to stop guidance. Result suggests that difficult-to-verify guidance is used strategically, and that strategic use of the guidance is negatively related with investor monitoring. The third essay of the thesis contributes to the vast literature investigating earnings management, and to the narrower branch of literature examining real operations manipulation. I find that R&D-intensive firms meeting or exceeding markets' annual earnings expectations postpone fiscal year's final quarter R&D spending to the subsequent quarter. In addition, I find that the R&D manipulation by postponing quarterly spending has no effect on firm's real operations measured by the level of R&D investments. In the third essay I also hypothesize that the earnings manipulation decision is more complex than previously documented, and that there exists interconnectedness between different reporting objectives that management must consider. I find evidence that R&D manipulation for earnings management purposes is conditional to firm reaching markets' R&D growth expectation.
Translated title of the contributionMitigating Information Asymmetry, Strategic Disclosure and Manipulating Numbers
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
  • Ikäheimo, Seppo, Supervising Professor
Print ISBNs978-952-60-8039-0
Publication statusPublished - 2018
MoE publication typeG5 Doctoral dissertation (article)


  • corporate disclosure
  • financial reporting decisions
  • uncertainty
  • investments
  • firms


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