Abstract

References (58)

Beta

Citations (42)

Beta

One-Click Download | Share | Email | Add to Briefcase

Do Managers Withhold Bad News?

S.P. Kothari
Massachusetts Institute of Technology (MIT) - Sloan School of Management

Susan Shu
Boston College - Carroll School of Management

Peter D. Wysocki
University of Miami School of Business Administration

Journal of Accounting Research, Forthcoming
MIT Sloan Research Paper No. 4556-05

Abstract:
In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average, delays the release of bad news to investors.

Keywords: Bad News, Conservatism, Disclosure

JEL Classifications: G14, G30, K22, M41, M45, D82, M40

Accepted Paper Series

Date posted: September 21, 2005 ; Last revised: January 30, 2009

Suggested Citation

Kothari, S.P., Shu, Susan and Wysocki, Peter D., Do Managers Withhold Bad News?. Journal of Accounting Research, Forthcoming; MIT Sloan Research Paper No. 4556-05. Available at SSRN: http://ssrn.com/abstract=803865

Export to: Export Citation What's this?

Contact Information

S.P. Kothari (Contact Author) Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email ) E52-325 Cambridge, MA 02142 United States 617-253-0994 (Phone) 617-253-0603 (Fax)
Susan Shu Boston College - Carroll School of Management ( email ) Boston College 140 Commonwealth Ave. Chestnut Hill, MA 02167 United States 617-552-1759 (Phone)
Peter D. Wysocki University of Miami School of Business Administration ( email ) Department of Accounting - K/E 308 5250 University Drive Coral Gables, FL 33146-6531 United States 305-284-8618 (Phone)