How Often Do Managers Withhold Information?
52 Pages Posted: 7 Mar 2016 Last revised: 15 Aug 2019
Date Written: August 12, 2019
We estimate a dynamic model of voluntary disclosure, using annual management forecasts of earnings, that features a manager with price motives and an uncertain but persistent information endowment. Our estimates imply that: (i) managers face disclosure frictions 35% of the time; (ii) conditional on being informed, managers withhold information 17% of the time; and (iii) conditional on being silent, managers possess information 24% of the time. Managers’ strategic withholding motives increase investors’ uncertainty about earnings by 3%. We find that managers’ price motives reduce strategic withholding by one-third, in response to investors’ increased skepticism in the event of non-disclosure.
Keywords: voluntary disclosure, management forecasts, information endowment, strategic withholding, structural estimation, disclosure cost
JEL Classification: D82, D83, G17
Suggested Citation: Suggested Citation