Are Managers Strategic in Reporting Non-Earnings News? Evidence on Timing and News Bundling

51 Pages Posted: 23 Apr 2013 Last revised: 13 Dec 2015

See all articles by Benjamin Segal

Benjamin Segal

Fordham University; Hebrew University of Jerusalem

Dan Segal

Interdisciplinary Center (IDC) Herzliyah

Date Written: December 7, 2015

Abstract

Using a comprehensive sample of non-earnings 8-K filings from 2005–2013, we examine whether firms engage in strategic reporting of mandatory and voluntary news. In particular, we examine whether firms report negative news when investor attention is low, and whether firms bundle positive and negative news. Our findings support the notion that managers believe in the existence of investor inattention and engage in strategic disclosure by reporting negative news after trading hours. These results particularly apply to public firms, where equity market pressures provide stronger incentives to mitigate market reaction to news by exploiting investor inattention. Further analysis of the market reaction to strategic disclosure uncovers no evidence of investor inattention, consistent with market efficiency. We also observe that public firms are more likely to engage in strategic disclosure through news bundling and that the likelihood of strategic disclosure through bundling increases with the likelihood of strategic disclosure through timing.

Note: Previous title: "The Opportunistic Reporting of Material Events and the Apparent Misconception of Investors' Reaction"

Keywords: SEC Regulation, Form 8-K, Voluntary Disclosure, Mandatory Disclosure, Investor Inattention

JEL Classification: G14, G18, K22, M41, M48

Suggested Citation

Segal, Benjamin and Segal, Dan, Are Managers Strategic in Reporting Non-Earnings News? Evidence on Timing and News Bundling (December 7, 2015). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2255345 or http://dx.doi.org/10.2139/ssrn.2255345

Benjamin Segal (Contact Author)

Fordham University ( email )

113 West 60th Street
New York, NY 10023
United States

Hebrew University of Jerusalem

Dan Segal

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150
Israel

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