Managers’ Strategic Use of Concurrent Disclosure: Evidence from 8-K Filings and Press Releases

The Accounting Review

50 Pages Posted: 31 Oct 2022

See all articles by Caleb Rawson

Caleb Rawson

University of Arkansas - Department of Accounting

Brady J. Twedt

Texas A&M University - Department of Accounting

Jessica Watkins

University of Notre Dame

Date Written: October 4, 2022

Abstract

This study examines managers’ strategic use of concurrent disclosures around the announcement of negative material events. We predict and find that managers disclosing negative 8-K news are more likely to issue a concurrent press release about an unrelated event relative to a press release providing additional context for the 8-K triggering event in order to increase investor information processing costs. This strategy appears distinct from the bundling of news to deter litigation. We find that managers more commonly issue concurrent unrelated press releases when they have stronger incentives to impede the pricing of negative information, and that doing so is associated with a reduction in the speed with which prices reflect the news. Our findings shed light on a previously unexplored tool managers use to exploit investors’ processing capacity constraints to “hide” negative news.

Keywords: Strategic disclosure, disclosure processing costs, investor attention

JEL Classification: G12, G14, M41, M48

Suggested Citation

Rawson, Caleb and Twedt, Brady J. and Watkins, Jessica, Managers’ Strategic Use of Concurrent Disclosure: Evidence from 8-K Filings and Press Releases (October 4, 2022). The Accounting Review, Available at SSRN: https://ssrn.com/abstract=4254135

Caleb Rawson

University of Arkansas - Department of Accounting ( email )

Business Bldg. 454
Fayetteville, AR 72701
United States

Brady J. Twedt (Contact Author)

Texas A&M University - Department of Accounting ( email )

Mays Business School
College Station, TX 77843-4353
United States

Jessica Watkins

University of Notre Dame ( email )

384 Mendoza College of Business
Notre Dame, IN 46656
United States

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