Transformations  in
Business & Economics

DISCLOSURE LEVEL AND QUALITY EFFECT OF FORWARD-LOOKING INFORMATION ON FIRM'S STOCK RETURN: THE MODERATING EFFECT OF OWNERSHIP STRUCTURE⁶
Nazratul Aina Mohamad Anwar, Fakarudin Kamarudin, Bany Ariffin Amin Noordin, Hafezali Iqbal Hussain, Leonardus WW Mihardjo

ABSTRACT. This study investigates the effect of disclosure level and quality of forward-looking on the stock return of the firm and ascertaining whether the ownership structure of the firm can play a moderating role to either weaken or strengthen the relationship between the disclosure quality of forward-looking information and stock return of the firm. The analysis uses abnormal return, modified earnings-return, and modified price models as empirical models to examine each disclosure effects of forward-looking information and its moderating factors on the stock return of the 168 Malaysian public listed firms. Based on the cross-sectional regression analysis, findings show that the disclosure level and disclosure quality of forward-looking information is positive and significantly related to the firm's stock return under the earnings-return model. Ownership structure also plays a significant role in moderating the relationship between disclosure quality of forward-looking information and the firm's stock return by strengthening the relationship. The findings may contribute to the accounting standard setters or regulatory bodies in improving and make some renewal on corporate disclosure guide by outlining specific criteria of information that can be considered as quality information in preparing a forward-looking statement to promote corporate transparency.
In addition, this result can contribute to assisting the family-owned firms on how to entice back the attention of investors upon their perception towards information asymmetry issue caused by the agency problems that commonly exist in this type of ownership structure 

KEYWORDS:  disclosure quality, forward-looking information, ownership structure.

JEL classification:  G32, L15.

⁶Acknowledgments: We would like to give thanks to the editors and the anonymous referees of the journal for constructive comments and suggestions, which have significantly helped to improve the contents of the paper. Furthermore, special thanks to 1) USIM/YTI/FEM052002/41118 sponsored by Yayasan Tun Ismail Mohamed Ali Berdaftar (YTI) Permodalan Nasional Berhad (PNB); 2) University Grant Phase 2/2017 research code (PPP/FEM/0217/051000/10218) sponsored by Universiti Sains Islam Malaysia; 3) Universiti Putra Malaysia Grant Putra Vot No 9632100 sponsored by Universiti Putra Malaysia; 4) Universiti Putra Malaysia Grant IPM Vot No 9473700 sponsored by Universiti Putra Malaysia; 5) Universiti Putra Malaysia Grant IPS Vot No. 9651500 sponsored by Universiti Putra Malaysia; and 6) Fundamental Research Grant Scheme (FRGS) Vot No FRGS/1/2015/SS01/UPM/02/1 5524716 sponsored by Malaysian Ministry of Higher Education as organisations that funded our research. The usual caveats apply.