Switching from Voluntary to Mandatory Disclosure: Do Managers View Them as Substitutes?

Noh, Suzie; So, Eric C.; Weber, Joseph

doi:10.2139/ssrn.2939210

Cited by 10 publications

(5 citation statements)

References 35 publications

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“…In contrast, in our 8-K specification, losses and stock return volatility have signs opposite to those in the forecast specification. This difference is consistent with 8-Ks and forecasts substituting for one another (Noh et al 2017). Finally, Disclosures are positively related to size, leverage, stock return volatility, and analyst coverage, and are negatively related to returns and to the absolute change in earnings.…”

Section: Summary Statisticssupporting

confidence: 78%

“…Our paper contributes to research concerned with understanding firm disclosure choices (Verrecchia 1990;Healy and Palepu 2001;Beyer et al 2010), and forecasts and 8-Ks in particular (Lerman and Livnat 2010;Noh et al 2017). A common theme in this literature is that firms develop a sustained disclosure policy that incorporates their competitive environment, proprietary and agency costs, and investor base.…”

Section: Introductionmentioning

confidence: 95%

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Institutional Investor Attention and Firm Disclosure

Abramova

Core

Sutherland

2020

The Accounting Review

107

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We study how short-term changes in institutional owner attention affect managers' disclosure choices. Holding institutional ownership constant and controlling for industry-quarter effects, we find that managers respond to attention by increasing the number of forecasts and 8-K filings. Rather than alter the decision of whether to forecast or to provide more informative disclosures, attention causes minor disclosure adjustments. This variation in disclosure is primarily driven by passive investors. Although attention explains significant variation in the quantity of disclosure, we find little change in abnormal volume and volatility, the bid-ask spread, or depth. Overall, our evidence suggests that management responds to temporary institutional investor attention by making disclosures that have little effect on information quality or liquidity.

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Section: Summary Statisticssupporting

confidence: 78%

Section: Introductionmentioning

confidence: 95%

Institutional Investor Attention and Firm Disclosure

Abramova

Core

Sutherland

2020

The Accounting Review

107

View full text Add to dashboard Cite

show abstract

“…In contrast, in our 8-K specification, losses and stock return volatility have signs opposite to those in the forecast specification. This difference is consistent with 8-Ks and forecasts substituting for one another (Noh et al 2017 Third, we investigate whether changes in firm fundamentals rather than attention are causing our results. Although we control for industry-quarter effects, and lag returns and accounting performance, as an additional step we eliminate firms experiencing significant changes in their performance.…”

Section: Io Distraction and Disclosuresupporting

confidence: 75%

Section: Introductionmentioning

confidence: 95%

Institutional Investor Attention and Demand for Inconsequential Disclosures

2017

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We study how short-term changes in a proxy for passive institutional owner attention affect managers' short-term disclosure choices. Holding institutional ownership constant and controlling for industry-quarter effects, we find that managers respond to attention by increasing the number of forecasts and 8-K filings. Rather than alter the decision of whether to forecast or to provide more informative disclosures, attention causes minor disclosure adjustments. Although attention explains significant variation in the quantity of disclosure, we find no change in abnormal volume and volatility, the bid-ask spread, or price impact of trades. Overall, our evidence suggests that management responds to temporary institutional investor attention by making disclosures that have little effect on information quality or liquidity.

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“…For example, Lerman and Livnat (2010) document that 8-K filings are associated with abnormal volume and return volatility, while Watkins (2020) documents that 8-K filings are associated with reductions in information asymmetry. Noh et al (2019) demonstrate that 8-K filings disclose a wide array of information, and that after the 2004 regulatory change, firms are more reliant on 8-Ks to convey information. Finally, McMullin et al (2019) find that an increased use of 8-Ks following the 2004 regulatory change is associated with more efficient price discovery.…”

Section: Form 8-k Filings and Press Releasesmentioning

confidence: 96%

Managers’ Strategic Use of Concurrent Disclosure: Evidence from 8-K Filings and Press Releases

Rawson

Twedt

Watkins

2023

The Accounting Review

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This study examines managers’ strategic use of concurrent disclosures around the announcement of negative material events. We predict and find that managers disclosing negative 8-K news are more likely to issue a concurrent press release about an unrelated event relative to a press release providing additional context for the 8-K triggering event in order to increase investor information processing costs. This strategy appears distinct from the bundling of news to deter litigation. We find that managers more commonly issue concurrent unrelated press releases when they have stronger incentives to impede the pricing of negative information, and that doing so is associated with a reduction in the speed with which prices reflect the news. Our findings shed light on a previously unexplored tool managers use to exploit investors’ processing capacity constraints to “hide” negative news.

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Switching from Voluntary to Mandatory Disclosure: Do Managers View Them as Substitutes?

Cited by 10 publications

References 35 publications

Institutional Investor Attention and Firm Disclosure

Institutional Investor Attention and Firm Disclosure

Institutional Investor Attention and Demand for Inconsequential Disclosures

Managers’ Strategic Use of Concurrent Disclosure: Evidence from 8-K Filings and Press Releases

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