Why Firms Voluntarily Disclose Bad News PDF Download

Author: Douglas J. Skinner
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Author: John J. Shon
Publisher:
ISBN:
Category : Financial statements
Languages : en
Pages : 374

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Author: Dichu Bao
Publisher:
ISBN:
Category :
Languages : en
Pages : 54

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Book Description
Prior studies provide conflicting evidence as to whether managers have a general tendency to disclose or withhold bad news. A key challenge for this literature is that researchers cannot observe the negative private information that managers possess. We tackle this challenge by constructing a proxy for managers' private bad news (residual short interest), based on the level of short interest in the stock, and then perform a series of tests to validate this proxy. Using management earnings guidance and 8-K filings as measures of voluntary disclosure, we find a consistent negative relation between bad-news disclosure and residual short interest, suggesting that managers withhold bad news in general. This tendency, however, is tempered when firms are exposed to higher litigation risk, and it is strengthened when managers have greater incentives to support the stock price. Based on a novel approach to identifying the presence of bad news, our study adds to the debate on whether managers tend to withhold or release bad news.

Author: Raymond Cox
Publisher:
ISBN:
Category :
Languages : en
Pages :

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This study examines whether investors overreact to bad news during good times and under react to bad news during bad times. We examine investors' reaction to bad news during economic cycles for a sample of 445 U.S. firms issuing voluntary disclosures of profit warnings prior to a quarterly earnings per share announcement during the 1995 to 2009 period. We find that the immediate price reaction to a firm's profit warning (bad news) is stronger during periods of economic expansion (good times) than during periods of economic contraction (bad times). However, the reaction is sensitive to the methodology employed and event window selected. We also find less negative stock return reaction during the post Sarbanes-Oxley (SOX) period compared to the pre-SOX period.

Author: Francesco De Luca
Publisher: Emerald Group Publishing
ISBN: 1839825065
Category : Business & Economics
Languages : en
Pages : 104

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Book Description
The aim of the EU Directive 2014/95/EU, requiring the mandatory disclosure of non-financial information (NFI) by large undertakings and groups, is to rebuild trust with stakeholders. This book aims to summarize the relevant literature about company information with particular reference to the voluntary vis a vis mandatory NFI.

Author: Frank de Jong
Publisher: Cambridge University Press
ISBN: 1139478443
Category : Business & Economics
Languages : en
Pages : 209

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Book Description
The analysis of the microstructure of financial markets has been one of the most important areas of research in finance and has allowed scholars and practitioners alike to have a much more sophisticated understanding of the dynamics of price formation in financial markets. Frank de Jong and Barbara Rindi provide an integrated graduate level textbook treatment of the theory and empirics of the subject, starting with a detailed description of the trading systems on stock exchanges and other markets and then turning to economic theory and asset pricing models. Special attention is paid to models explaining transaction costs, with a treatment of the measurement of these costs and the implications for the return on investment. The final chapters review recent developments in the academic literature. End-of-chapter exercises and downloadable data from the book's companion website provide opportunities to revise and apply models developed in the text.

Author: Jean-François Arvis
Publisher: World Bank Publications
ISBN:
Category : Business & Economics
Languages : en
Pages : 268

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Book Description
Recent corporate scandals have highlighted the importance of both public sector initiatives and sound internal company policies in the fight against fraud and corruption. This book discusses the efforts of Western and Asian companies to develop good standards of business conduct in their East Asian operations. It contains case studies from a wide range of corporate settings which describe practical examples of best practices in programmes dealing with a range of topics including ethics standards and codes of business practice, anti-bribery measures, reporting and warning procedures.

Author: Konrad Lang
Publisher:
ISBN:
Category :
Languages : en
Pages : 24

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Book Description
Empiricists document that firms more often voluntarily disclose bad news than good news and link this pessimism to managers' increased incentives not to fall short of earnings expectations. This paper analyzes the voluntary disclosure of a manager's private information by explicitly considering her incentives to meet or beat an analyst's earnings forecast. The model predicts that managers who face strong incentives to meet or beat these forecasts more frequently disclose bad news than good news in order to guide analysts' expectations about future earnings downward. This pessimism is higher in markets with less informed managers and may hold even if the manager has strong incentives for high stock prices and meet-or-beat incentives are comparably low.

Author: Jenny Wu Tucker
Publisher:
ISBN:
Category :
Languages : en
Pages : 36

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Book Description
There are mixed views about whether firm managers voluntarily disclose good news in a more timely fashion than they do bad news. Our study investigates this issue by inferring managers' strategic disclosure behavior from firms' stock returns in the earnings announcement vs. non-announcement windows in the recent time period (1996-2005). We find that large firms' non-announcement excess returns are significantly lower than their announcement returns and vice versa for a typical small firm. Because excess return captures news arrived during the measurement window, our results suggest that for large firms bad news is relatively more timely than good news and for small firms good news is relatively more timely than bad news. If private information search is as likely to uncover good news as it is to uncover bad news, our evidence suggests that large firms preempt bad news, whereas small firms preempt good news. Furthermore, we find the relative timeliness of large firms' bad news only in the recent period, not in an early time period, suggesting that preemptive bad-news disclosure of large firms is a recent phenomenon.

Author: Chandra Kanodia
Publisher: Now Publishers Inc
ISBN: 1601980620
Category : Business & Economics
Languages : en
Pages : 105

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Book Description
Kanodia presents a new approach to the study of accounting measurement that argues that how firms' economic transactions, earnings, and capital flows are measured and reported to the capital markets has substantial effects on the firms' real decisions and on the allocation of resources.