Do Managers Withhold Bad News?

S. P. Kothari, Susan Shu and Peter Wysocki

Journal of Accounting Research, 2009, vol. 47, issue 1, 241-276

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.

Date: 2009
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https://doi.org/10.1111/j.1475-679X.2008.00318.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:47:y:2009:i:1:p:241-276

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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