Sequential Reporting Bias

61 Pages Posted: 3 Feb 2021 Last revised: 12 Sep 2022

See all articles by Cyrus Aghamolla

Cyrus Aghamolla

Rice University

Ilan Guttman

Leonard N. Stern School of Business, New York University; New York University - Stern Scholl of business

Evgeny Petrov

University of Zurich - Department of Business Administration

Date Written: September 12, 2022


Firms with correlated fundamentals often issue reports sequentially, leading to information spillovers. The theoretical literature has investigated multi-firm reporting, but only when firms report simultaneously. We examine the implications of sequential reporting, where firms aim to maximize their market price and can manipulate their reports. Our model demonstrates that the introduction of sequentiality in the presence of information spillovers significantly alters the biasing behavior of firms and the resulting informational environment relative to simultaneous reporting. In particular, a lead firm always manipulates more when reports are issued sequentially than under simultaneous reporting. Interestingly, this occurs because follower firms, who benefit from information spillovers, place less weight on their own private information when issuing a report. This information loss leads the market to place greater weight on the leader's report, which increases the incentive of the lead manager to manipulate her report. Moreover, the information loss from sequentiality leads to less efficient and less volatile prices. Additionally, we find that stronger correlation in firm fundamentals can amplify the lead firm's incentive for manipulation under sequentiality, in contrast to simultaneous reporting. We offer additional results regarding, for example, market response coefficients, and provide a number of empirical implications.

Keywords: disclosure, information spillovers, reporting, manipulation, bias, clustering

JEL Classification: C72, D82, D83, G14, M41

Suggested Citation

Aghamolla, Cyrus and Guttman, Ilan and Petrov, Evgeny, Sequential Reporting Bias (September 12, 2022). HKUST Business School Research Paper No. 2020-015, Available at SSRN: or

Cyrus Aghamolla (Contact Author)

Rice University

6100 South Main Street
Houston, TX 77005-1892
United States

Ilan Guttman

Leonard N. Stern School of Business, New York University ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

New York University - Stern Scholl of business ( email )

Evgeny Petrov

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006

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