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Asymmetric Reporting Timeliness and Informational Feedback

Author

Listed:
  • 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)

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.

Suggested Citation

  • Qi Chen & Zeqiong Huang & Xu Jiang & Gaoqing Zhang & Yun Zhang, 2021. "Asymmetric Reporting Timeliness and Informational Feedback," Management Science, INFORMS, vol. 67(8), pages 5194-5208, August.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:8:p:5194-5208
    DOI: 10.1287/mnsc.2020.3734
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    References listed on IDEAS

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    Cited by:

    1. Anil Arya & Brian Mittendorf & Ram N. V. Ramanan, 2022. "Tax-Favored Stock Donations by Corporate Insiders and Consequences for Equity Markets," Management Science, INFORMS, vol. 68(11), pages 8506-8514, November.

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