Real-time revenue and firm disclosure

52 Pages Posted: 11 Mar 2021 Last revised: 2 Jun 2021

See all articles by Elizabeth Blankespoor

Elizabeth Blankespoor

University of Washington - Michael G. Foster School of Business

Bradley E. Hendricks

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Joseph D. Piotroski

Stanford Graduate School of Business

Christina Synn

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: May 1, 2021

Abstract

We examine firm disclosure choice when information is received on a real-time, continuous basis. We use transaction-level credit and debit card sales for a sample of retail firms to construct a weekly measure of abnormal revenue for each firm. We validate the informativeness of this abnormal real-time revenue information, confirming its positive correlation with abnormal returns, unexpected revenue realizations, and management revenue forecast news. Using revenue forecasts, we find that firms are less likely to disclose abnormally negative news early in the quarter. As the quarter progresses, firms reduce their withholding of negative news. These results are consistent with impending earnings announcements disciplining managers to provide negative news. This pattern of initial withholding and then disclosure exists primarily in firms with high analyst coverage, high institutional ownership, or high litigation risk. Finally, we find increased insider stock sales in weeks with abnormally negative news and no firm disclosure. Overall, our study provides evidence of the informativeness of real-time information and manager discretion in its release.

Keywords: real-time revenue, private information, management forecasts, disclosure dynamics

JEL Classification: G14, M41, M45, D82

Suggested Citation

Blankespoor, Elizabeth and Hendricks, Bradley E. and Piotroski, Joseph D. and Synn, Christina, Real-time revenue and firm disclosure (May 1, 2021). Stanford University Graduate School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=3801086 or http://dx.doi.org/10.2139/ssrn.3801086

Elizabeth Blankespoor

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Bradley E. Hendricks (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
(919) 962-3619 (Phone)

Joseph D. Piotroski

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Christina Synn

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

McColl Building
Chapel Hill, NC 27599-3490
United States

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