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Voluntary Disclosures and Earnings Surprises: The Case of High-Tech Firms in Periods of Bad Economic News

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  • John Shon

Abstract

In this study, I examine the voluntary disclosure behavior of high-tech firms experiencing bad economic news. I create a sample of 100 randomly-selected firm-quarters with negative returns—but not necessarily negative earnings surprises. I find that: (i) the unconditional relation between earnings surprises and voluntary disclosures is non-existent in this setting where negative stock returns are controlled for, but (ii) firms with negative earnings surprises make forward-looking statements with more negative information content—but only when conditioned on firm size or growth opportunities. Sample selection procedures can therefore affect inferences drawn from voluntary disclosure behavior documented in extant studies. Conditional analysis reveals how the earnings-disclosure relation crosssectionally varies with firms’ economic characteristics.

Suggested Citation

  • John Shon, 2009. "Voluntary Disclosures and Earnings Surprises: The Case of High-Tech Firms in Periods of Bad Economic News," Accounting & Taxation, The Institute for Business and Finance Research, vol. 1(1), pages 1-13.
  • Handle: RePEc:ibf:acttax:v:1:y:2009:i:1:p:1-13
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    Cited by:

    1. Malthus Timothy Ekpe & Rosemary Obiageri Obasi & Sadiq Rabiu Abdullahi & Umar Aliyu Mustapha & Norfadzilah Rashid, 2020. "Earnings Surprises and Stock Price Reactions of Quoted Companies in Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 306-315, July.

    More about this item

    Keywords

    Voluntary disclosures; earnings surprise; bad economic news; litigation risk;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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