Large-Sample Evidence on Firms' Year-over-Year MD&A Modifications

Stephen V. Brown, Jennifer Wu Tucker

Research output: Contribution to journalArticlepeer-review

212 Scopus citations


The Securities and Exchange Commission (SEC) has expressed concern about the informativeness of firms' Management Discussion and Analysis (MD&A) disclosures. A firm's MD&A is potentially uninformative if it does not change appreciably from the previous year after significant economic changes at the firm. We introduce a measure for narrative disclosure-the degree to which the MD&A differs from the previous disclosure-and provide three findings on the usefulness of MD&A disclosure. First, firms with larger economic changes modify the MD&A more than those with smaller economic changes. Second, the magnitude of stock price responses to 10-K filings is positively associated with the MD&A modification score, but analyst earnings forecast revisions are unassociated with the score, suggesting that investors-but not analysts-use MD&A information. Finally, MD&A modification scores have declined in the past decade even as MD&A disclosures have become longer; the price reaction to MD&A modification scores has also weakened, suggesting a decline in MD&A usefulness.

Original languageEnglish (US)
Pages (from-to)309-346
Number of pages38
JournalJournal of Accounting Research
Issue number2
StatePublished - May 1 2011

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Large-Sample Evidence on Firms' Year-over-Year MD&A Modifications'. Together they form a unique fingerprint.

Cite this