This study examines the properties of innovation disclosures contained in new product announcements, a form of voluntary, nonfinancial disclosure. We analyze these properties using a novel, text-based measure of the extent of product innovation disclosed in new product announcements. We find that stock prices react more positively to announcements with more extensive innovation disclosure. In our main analyses, we first find that a higher level of innovation disclosure predicts a greater increase in future sales. We further find that this predictive ability falls when managers have stronger incentives to maximize their wealth and when the corporate governance structure and customers’ bargaining power weaken. Our research enhances the understanding of the properties of managerial voluntary, nonfinancial disclosures and contributes a text-based measure of innovation that captures managerial assessment of the extent of product innovation. This new measure is more generalizable and incrementally informative for firm value and future performance than conventional innovation measures that depend on the existence of patents or research and development expenses.
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- PhD in Accounting, University of Oregon
- B.B.A, The Chinese University of Hong Kong
- Professor, The University of Hong Kong (HKU), 2017 – present
- Associate Professor, Hong Kong University of Science and Technology (HKUST), 2010 – 2016
- Assistant Professor, Hong Kong University of Science and Technology (HKUST), 2004 – 2010
- Financial and managerial accounting
- Capital markets
- Contracting
- Litigation Studies
- “Federal judge ideology and the going‐concern reporting incentives of Big 4 and non–Big 4 auditors.” Contemporary Accounting Research, 2025, forthcoming. (with Tracy Gu, Yinzhen Jiang and Dan Simunic).
- “New Product Announcements, Innovation Disclosure, and Future Firm Performance.” Review of Accounting Studies, 2025, 30(1), 352-383. (with Jenny Chu, Yuan He and Reuven Lehavy).
- “Contract Contingencies and Uncertainty: Evidence from Product Market Contracts”, Journal of Accounting and Economics, 2024, forthcoming (with Jun Oh, Guoman She and P. Eric Yeung).
- “Judge Ideology and Opportunistic Insider Trading.” Journal of Financial and Quantitative Analysis, 2024, forthcoming. (with Allen Huang and Yue Zheng).
- “Analysts’ Book Value Forecasts: Initial Evidence from the Perspective of Real-Options-Based Valuation.” Contemporary Accounting Research, 2022, 39(4), 2481-2516. (with Alfred Zhu Liu, Schneible Jr, Richard and Guochang Zhang).
- “The Rewards for Meeting or Beating Managers’ Own Earnings Guidance.” Accounting Horizons, 2021, 35(1), 87-103. (with Alfred Zhu Liu and Yao Zhang).
- “Maintaining a Reputation for Consistently Beating Earnings Expectations and the Slippery Slope to Earnings Manipulation.” Contemporary Accounting Research, 2019, 36(4), 1966-1998. (with Jenny Chu, Patricia Dechow, and Annika Wong).
- “Federal Judge Ideology: A New Measure of Ex-Ante Litigation Risk.” Journal of Accounting Research, 2019, 57(2), 431-489. (with Allen Huang and Reeyarn Li).
- “The Effect of Major Customer Concentration on Firm Profitability: Competitive or Collaborative?” Review of Accounting Studies, 2019, 24(1), 189-229. (with Chuchu Liang and Eric Yeung).
- “On the Persistence and Pricing of Industry-Wide and Firm-Specific Earnings, Cash Flows, and Accruals.” Journal of Accounting and Economics, 2016, 61(1), 185–202. (with K. Nelson and Eric Yeung).
- “Analyst Report Readability and Stock Returns.” Journal of Business Finance and Accounting, 2016, 43(1-2), 98–130. (with Hsieh, C. C. and Y. Zhang).
- “Are CEOs and CFOs Rewarded for Disclosure Quality?” The Accounting Review, 2015, 90(3), 1013-1047. (with Steve Matsunaga).
- “The Market’s Valuation of Fraudulently Reported Earnings.” Journal of Business Finance and Accounting, 2014, 41(5-6), 627–651. (with Clive Lennox and G. Zhang).
- “Underreaction to Industry-Wide Earnings and the Post-Forecast Revision Drift.” Journal of Accounting Research, 2013, 51(4), 701-737. (with Eric Yeung).
- “Corporate Suppliers and Customers and Accounting Conservatism.” Journal of Accounting and Economics, 2012, 53(1-2), 115-135. (with Sandy Klasa and Eric Yeung).
- “Managers’ EPS Forecasts: Nickeling and Diming the Market?” The Accounting Review, 2010, 85(1), 63-95. (with Linda Smith Bamber and Eric Yeung).
- “Does Religion Matter in Corporate Decision Making in America?” Journal of Financial Economics, 2009, 93(3), 455-473. (with Gilles Hilary).
- “The Impact of Conservatism on Management Earnings Forecast.” Journal of Accounting and Economics, 2009, 47(3), 192-207. (with Dale Morse and Steve Matsunaga).
- Dean’s Letter for Excellent MBA Teaching, 2015
- Franklin Prize for Teaching Excellence, (Undergraduate Teaching), 2005
- Certified Public Accountant, Washington, U.S.A.
This study examines the usefulness of analysts' book value forecasts and the economic factors driving analysts' issuance of these forecasts. Guided by the real-options-based valuation model (ROM) of Zhang (2000), we explicitly link book value forecasts to the need for such information in valuation. We first establish that analysts' book value forecasts are superior to forecasts that are mechanically imputed from analysts' own earnings forecasts and those from random walk models and are incrementally informative beyond analysts' earnings, cash flow, and dividend forecasts. We then employ the ROM to explore the distinct information embedded in book value forecasts and analysts' decisions to issue these forecasts. Consistent with our expectations, we find that (i) book value forecasts convey growth information that is significantly correlated with ex ante indicators of real options, while analysts' earnings forecasts do not display this property; and (ii) analysts issue more book value forecasts when either growth options or, to a lesser extent, abandonment options are an important part of firm value. Our study sheds light on how analysts' book value forecasts are useful and under what circumstances analysts provide such information to meet investors' needs.