Asymmetric Reporting Timeliness and Informational Feedback

Qi Chen (), Zeqiong Huang (), Xu Jiang (), Gaoqing Zhang () and Yun Zhang ()
Additional contact information
Qi Chen: Accounting Group, Duke University, Durham, North Carolina 27708; Accounting Department, Tsinghua University, Beijing 100084, China
Zeqiong Huang: Accounting Group, Yale University, New Haven, Connecticut 06511
Xu Jiang: Accounting Group, Duke University, Durham, North Carolina 27708
Gaoqing Zhang: Accounting Department, University of Minnesota, Minneapolis, Minnesota 55455
Yun Zhang: Accounting Department, George Washington University, Washington, District of Columbia 20052

Management Science, 2021, vol. 67, issue 8, 5194-5208

Abstract: We examine the effects of asymmetric timeliness in reporting good versus bad news on price informativeness when prices provide useful information to assist firms’ investment decisions. We find that a reporting system featuring more timely disclosure of bad news than of good news encourages speculators to trade on their private information. Consequently, it generates a higher expected investment level and firm value. Our analysis generates predictions consistent with empirical findings and provides a justification for the more timely reporting of bad news in the absence of managerial incentive problems.

Keywords: timely loss recognition; price informativeness; feedback effect (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:8:p:5194-5208

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