Is Silence Golden Sometimes? Management Guidance Withdrawals During the COVID-19 Pandemic

64 Pages Posted: 5 Oct 2021 Last revised: 1 Nov 2021

See all articles by Ole-Kristian Hope

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Congcong Li

Duquesne University - A.J. Palumbo School of Business Administration

Mark (Shuai) Ma

University of Pittsburgh - Katz Graduate School of Business

Xijiang Su

Schulich School of Business, York University

Multiple version iconThere are 2 versions of this paper

Date Written: October 29, 2021

Abstract

The large number of management guidance withdrawals during the COVID-19 pandemic has attracted considerable attention from the media, investors, and regulators. This study analyzes the determinants and consequences of such withdrawals. We find that guidance withdrawals are due to economic uncertainty resulting from firms’ exposure to the COVID-19 pandemic rather than poor financial performance. Also, the effect of COVID-19 exposure on guidance withdrawals is stronger when firms face higher litigation risk. Further, guidance withdrawals result in abnormally large trading volumes and high analyst forecast dispersion but do not negatively affect stock prices or the level of analyst earnings forecasts. Overall, we believe the findings have implications for understanding corporate disclosure practices during periods with heightened economic uncertainty.

Keywords: COVID-19 Pandemic, Economic Uncertainty, Management Guidance, Guidance Withdrawal, Analyst Forecasts

JEL Classification: G30, G34, M10, M40, M41

Suggested Citation

Hope, Ole-Kristian and Li, Congcong and Ma, Mark (Shuai) and Su, Xijiang, Is Silence Golden Sometimes? Management Guidance Withdrawals During the COVID-19 Pandemic (October 29, 2021). Available at SSRN: https://ssrn.com/abstract=3935782 or http://dx.doi.org/10.2139/ssrn.3935782

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Congcong Li

Duquesne University - A.J. Palumbo School of Business Administration ( email )

Pittsburgh, PA 15282
United States

Mark (Shuai) Ma

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Xijiang Su

Schulich School of Business, York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3 M3J 1P3
Canada

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