Is silence golden sometimes? Management guidance withdrawals during the COVID-19 pandemic

Ole-Kristian Hope (), Congcong Li (), Mark Shuai Ma () and Xijiang Su ()
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Ole-Kristian Hope: University of Toronto
Congcong Li: Duquesne University
Mark Shuai Ma: University of Pittsburgh
Xijiang Su: University of Toronto

Review of Accounting Studies, 2023, vol. 28, issue 4, No 13, 2319-2360

Abstract: Abstract The many management guidance withdrawals during the COVID-19 pandemic have attracted considerable attention from the media, investors, and regulators. This study analyzes the determinants and consequences of these withdrawals. We find that guidance withdrawals are due to economic uncertainty, resulting from firms’ exposure to the COVID-19 pandemic rather than poor financial performance. Also, the effect of COVID-19 exposure on guidance withdrawals is stronger when firms face higher litigation risk. Further, guidance withdrawals result in abnormally large trading volumes and high analyst forecast dispersion but do not harm stock prices or the level of analyst earnings forecasts. Overall we believe the findings have implications for understanding corporate disclosure practices during periods with heightened economic uncertainty.

Keywords: COVID-19 pandemic; Economic uncertainty; Management guidance; Guidance withdrawal; Analyst forecasts (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11142-022-09698-w

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