Investors, analysts, and regulators frequently advocate greater disclosure of non-financial information, such as customer metrics. Managers, however, argue that such metrics are costly to report, reveal sensitive information to competitors, and therefore will lower future cash-flows. To examine these counter arguments, this study presents the first empirical examination of the prevalence and consequences of backward- and forward-looking disclosures of customer metrics by manually coding 511 annual reports of firms in two industries, Telecommunications (365 reports) and Airlines (146 reports). The results reveal significant heterogeneity in the disclosure of customer metrics across firms and between industries. On average, in both industries, firms make more backward-looking than forward-looking disclosures. Interestingly, forward-looking disclosures of customer metrics are negatively associated with investors' uncertainty in both industries, and with analysts' uncertainty in the Telecommunications industry. Importantly, results do not support the managerial thesis that such disclosures have a negative impact on future cash-flows.
Journal of Marketing Research , Vol. 54, Issue 2, pp. 239-259