Citing fear of legal liability as a partial explanation, prior research documents (1) managers' reluctance to voluntarily disclose management earnings forecasts, and (2) greater forecast disclosure frequencies in periods of bad news. We provide evidence on how management earnings forecast disclosure differs between the United States (U.S.) and Canada, two otherwise similar business environments with different legal regimes. Canadian securities laws and judicial interpretations create a far less litigious environment than exists in the U.S. We find a greater frequency of management earnings forecast disclosure in Canada relative to the U.S. Further, although U.S. managers are relatively more likely to issue forecasts during interim periods in which earnings decrease, Canadian managers do not exhibit that tendency. Instead, Canadian managers issue more forecasts when earnings are increasing, and their forecasts are of annual rather than interim earnings. Also consistent with a less litigious environment, Canadian managers issue more precise and longer-term forecasts. These findings hold after controlling for other determinants of management earnings forecast disclosure that might differ between the two countries—firm size, earnings volatility, information asymmetry, growth, capitalization rates, and membership in high-technology and regulated industries.

Managers often explain their earnings forecasts by linking forecasted performance to their internal actions and the actions of parties external to the firm. These attributions potentially aid investors in the interpretation of management forecasts by confirming known relationships between attributions and profitability or by identifying additional causes that investors should consider when forecasting earnings. We investigate why managers choose to provide attributions with their forecasts and whether the attributions are related to security price reactions to management earnings forecasts. Using a sample of 951 management earnings forecasts issued from 1993 to 1996, we find that attributions are more likely for larger firms, less likely for firms in regulated industries, less likely for forecasts issued over longer horizons, more likely for bad news forecasts, and more likely for forecasts that are maximum type. Furthermore, attributions are associated with greater absolute price reactions to management forecasts, more negative price reactions to management forecasts (forecast news held constant), and a greater price reaction per dollar of * University of Georgia; †Indiana University; ‡Harvard University. We thank Andrea Astill, Ben Ayers, Linda Bamber, Dave Barrett, Neil Bhattacharya, Walt Blacconiere, Christine Botosan, Claire Bush, Jenny Gaver, Ken Gaver, Eric Lie, Laureen Maines, Roger Martin, Marlene Plumlee, Jamie Pratt, Aamer Sheikh, Kimberly Smith, David Upton, Jim Wahlen, Wanda Wallace, Isabel Wang, an anonymous referee, and workshop participants at the University of Utah, Indiana University, the University of Georgia, the University of Missouri, the College of William and Mary, and Louisiana State University for comments on earlier versions of this paper. We also gratefully acknowledge the contribution of IBES International Inc. for providing earnings per share forecast data. These data have been provided as part of a broad academic program to encourage earnings expectations research. unexpected earnings. Our findings hold after control for the aforementioned determinants of attributions and after control for other firm-and forecastspecific variables that are often associated with security prices.

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Theory argues that career concerns (i.e., concerns about the impact of current performance on contemporaneous and future compensation) encourage managers to withhold bad news disclosure. However, empirical evidence regarding the extent to which a manager's career concerns are associated with a delay in bad news disclosure is limited. Across multiple proxies for career concerns, we find that the extent to which managers delay bad news is positively associated with their level of career concerns. Then, we hand-collect data on a compensation contract that firms use to reduce CEOs' career concerns (i.e., ex ante severance pay agreements). We find that if managers receive a sufficiently large payment in the event of dismissal, they no longer delay the disclosure of bad news. Overall, our findings support prior theoretical evidence that managers delay bad news disclosure due to career concerns and suggest a mechanism through which firms can mitigate the delay. JEL Classifications: M12; M41. Data Availability: Data are available from the public sources cited in the text.

Managers often explain their earnings forecasts by linking forecasted performance to their internal actions and the actions of parties external to the firm. These attributions potentially aid investors in the interpretation of management forecasts by confirming known relationships between attributions and profitability or by identifying additional causes that investors should consider when forecasting earnings. We investigate why managers choose to provide attributions with their forecasts and whether the attributions are related to security price reactions to management earnings forecasts. Using a sample of 951 management earnings forecasts issued from 1993 to 1996, we find that attributions are more likely for larger firms, less likely for firms in regulated industries, less likely for forecasts issued over longer horizons, more likely for bad news forecasts, and more likely for forecasts that are maximum type. Furthermore, attributions are associated with greater absolute price reactions to management forecasts, more negative price reactions to management forecasts (forecast news held constant), and a greater price reaction per dollar of * University of Georgia; †Indiana University; ‡Harvard University. We thank Andrea Astill, Ben Ayers, Linda Bamber, Dave Barrett, Neil Bhattacharya, Walt Blacconiere, Christine Botosan, Claire Bush, Jenny Gaver, Ken Gaver, Eric Lie, Laureen Maines, Roger Martin, Marlene Plumlee, Jamie Pratt, Aamer Sheikh, Kimberly Smith, David Upton, Jim Wahlen, Wanda Wallace, Isabel Wang, an anonymous referee, and workshop participants at the University of Utah, Indiana University, the University of Georgia, the University of Missouri, the College of William and Mary, and Louisiana State University for comments on earlier versions of this paper. We also gratefully acknowledge the contribution of IBES International Inc. for providing earnings per share forecast data. These data have been provided as part of a broad academic program to encourage earnings expectations research. unexpected earnings. Our findings hold after control for the aforementioned determinants of attributions and after control for other firm-and forecastspecific variables that are often associated with security prices.