ABSTRACT
This chapter discusses the main choices underlying the research approach. It also discusses the selection of disclosure items to be studied and the sample of company financial statements. The chapter reviews the empirical approaches used in single-period studies and multi-period studies, respectively. Despite the various approaches to selecting explanatory variables, the general tendency in the literature is to adhere to a relatively small number of variables that recur across studies. The general pattern of results obtained with these variables is discussed. In the literature, three approaches can be distinguished to extend the time-frame of the analysis beyond a single period: pooling of observations from different periods in event studies, comparative static studies, and studies of change processes in absolute time. The quality of financial statements often referred to as ‘extent of disclosure’ defies attempts at exact measurement.
