Determinants of Voluntary Disclosures in Management Disclosure and Analysis(MD&A): Korean Evidence

This study examines the economic determinants of the voluntary disclosure of management disclosure and analysis (MD&A). The MD&A disclosures in Korea provide a unique setting to test the economic motives of voluntary disclosure because there are no regulations on MD&A contents and formats in Korea. We measure the level of voluntary disclosure by the number of words in an MD&A and the frequency of financial and nonfinancial information keywords within the MD&A. We find the levels of MD&A disclosure are positively associated with external financing, industry concentration, firm size, ownership of small investors, and top management's involvement in MD&A disclosure. These associations are robust to controlling industry membership and using change variables instead of level variables. Our results suggest managers use an MD&A as an information medium to communicate to the public even in the absence of mandatory requirements for MD&A disclosure.