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Voluntary Disclosures when There Is an Option to Delay Disclosure

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  • Rahul Menon

Abstract

What incentives drive managers to disclose immediately when they have an option to delay disclosures? I examine this question in a two‐period setting in which public news that is positively correlated with firm value arrives periodically. I show that, when the manager's likelihood of receiving information is independent of the public news, an informed manager is more likely to disclose immediately when the public news is good. This happens even as the disclosure threshold itself increases in the public news. My model provides a potential explanation for why managers have a higher propensity to provide earnings forecasts when current earnings are high. I also show that, even when disclosures are credible, the average price reaction to a voluntary disclosure is (i) decreasing in the magnitude of the public news and (ii) lower when the manager is more myopic. These results have potential implications for studies that use stock returns to measure the news contained in management disclosures. La communication d'information facultative quand s'offre la possibilité d'en reporter la publication Quelles motivations amènent les dirigeants à communiquer l'information sans attendre lorsque s'offre à eux la possibilité d'en reporter la publication ? L'auteur se penche sur cette question en se concentrant plus particulièrement sur deux périodes au cours desquelles des nouvelles publiques affichant une corrélation positive avec la valeur de l'entreprise sont périodiquement communiquées. Il constate que, lorsque la probabilité que le gestionnaire reçoive de l'information est indépendante des nouvelles publiées, un gestionnaire éclairé est davantage susceptible de communiquer l'information sans attendre lorsque les nouvelles publiques sont favorables. Il en est ainsi même lorsque le seuil de publication lui‐même augmente dans les nouvelles publiques. Le modèle de l'auteur fournit une explication potentielle des raisons pour lesquelles les gestionnaires sont davantage enclins à produire des prévisions de résultats lorsque les résultats de la période sont élevés. L'auteur montre également que, même lorsque l'information communiquée est crédible, la réaction du cours moyen à la communication d'information facultative a) diminue avec la multiplicité des nouvelles publiques et b) est moins importante lorsque le gestionnaire affiche une plus grande myopie. Ces résultats auront sans doute des répercussions sur les études dans lesquelles est utilisé le rendement des actions pour l'appréciation des nouvelles contenues dans l'information publiée par la direction.

Suggested Citation

  • Rahul Menon, 2020. "Voluntary Disclosures when There Is an Option to Delay Disclosure," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 829-856, June.
  • Handle: RePEc:wly:coacre:v:37:y:2020:i:2:p:829-856
    DOI: 10.1111/1911-3846.12529
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    References listed on IDEAS

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    Cited by:

    1. Jonathan Libgober & Beatrice Michaeli & Elyashiv Wiedman, 2023. "With a Grain of Salt: Uncertain Veracity of External News and Firm Disclosures," Papers 2304.09262, arXiv.org, revised Aug 2023.

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