Open AccessPosted Content
Do Managers Withhold Bad News
TLDR
In this article, the authors examine whether managers delay disclosure of bad news relative to good news and find that the negative stock price reaction to bad news disclosures is greater than the magnitude of the positive stock price response to positive news disclosures.Abstract:
In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average, delays the release of bad news to investors.read more
Citations
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The Financial Reporting Environment: Review of the Recent Literature
TL;DR: The authors provide a framework for analyzing the three main decisions that shape the corporate information environment in a capital markets setting: (1) managers' voluntary reporting and disclosure decisions, (2) reporting and disclosures mandated by regulators, and (3) reporting decisions by third-party intermediaries.
Posted Content
Corporate Tax Avoidance and Stock Price Crash Risk: Firm-Level Analysis
TL;DR: In this article, a large sample of U.S. firms for the period 1995-2008 was used to show that corporate tax avoidance is positively associated with firm-specific stock price crash risk, which is consistent with the following view: tax avoidance facilitates managerial rent extraction and bad news hoarding activities for extended periods by providing tools, masks, and justifications for these opportunistic behaviors.
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The Role of Information and Financial Reporting in Corporate Governance and Debt Contracting
TL;DR: In this article, the role of financial reporting transparency in reducing governance-related agency conflicts among managers, directors, and shareholders, as well as in reducing agency conflicts between shareholders and creditors, is reviewed.
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The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research
Christian Leuz,Peter D. Wysocki +1 more
TL;DR: The authors discusses the empirical literature on the economic consequences of disclosure and financial reporting regulation, drawing on U.S. and international evidence, highlighting the challenges with quantifying regulatory costs and benefits, measuring disclosure and reporting outcomes, and drawing causal inferences from regulatory studies.
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The Effect of Disclosures by Management, Analysts, and Financial Press on Cost of Capital, Return Volatility, and Analyst Forecasts: A Study Using Content Analysis
TL;DR: The authors found that negative disclosures from financial press sources result in increased cost of capital and return volatility, and favorable reports from financial media reduce the cost of the capital and the return volatility.
References
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Bid, ask and transaction prices in a specialist market with heterogeneously informed traders
TL;DR: The presence of traders with superior information leads to a positive bid-ask spread even when the specialist is risk-neutral and makes zero expected profits as discussed by the authors, and the expectation of the average spread squared times volume is bounded by a number that is independent of insider activity.
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Paul M. Healy,Krishna G. Palepu +1 more
TL;DR: In this article, the authors provide a framework for analyzing managers' reporting and disclosure decisions in a capital markets setting, and identify key research questions and key researchquestions, concluding that current research has generated a number of useful insights.
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Outside directors and CEO turnover
TL;DR: This article examined the relation between the monitoring of CEOs by inside and outside directors and CEO resignations using stock returns and earnings changes as measures of prior performance, and found that there is a stronger association between prior performance and the probability of a resignation.
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The economic implications of corporate financial reporting
TL;DR: This paper found that the majority of managers would avoid initiating a positive NPV project if it meant falling short of the current quarter's consensus earnings, and more than three-fourths of the surveyed executives would give up economic value in exchange for smooth earnings.