The Information Content of Note Disclosures and MD&A Information in the Financial Report – A Study of Market Reactions in Denmark

The preparation of disclosures in the financial report constitutes a significant cost to most companies, but do the disclosures have information content to investors? This paper examines stock market reactions to the release of note disclosures and MD&A (management discussion and analysis) information. The study is based on data from the Danish capital market in 2006-2009 because here it is largely possible to isolate the release of such information from other information in the financial report. The primary results suggest that for some companies, note disclosures and information in the MD&A section are considered highly value-relevant by investors. However, for the majority of companies, investors do not immediately revise their expectations based on the disclosures. The response seems to depend on company specific factors.