The Fleeting Effects of Disclosure Forthcomingness on Management's Reporting Credibility

Posted: 25 Aug 2004

Abstract

This study provides a theoretical framework and experimental evidence on how managers' disclosure decisions affect their credibility with investors. I find that in the short-term, more forthcoming disclosure has a positive effect on management's reporting credibility, especially when management is forthcoming about negative news. However, these short-term credibility effects do not persist over time. In the long-term, managers who report positive earnings news are rated as having higher reporting credibility than managers who report negative earnings news, regardless of their previous disclosure decisions.

Keywords: Management credibility, reporting credibility, management disclosure

JEL Classification: M41, M45

Suggested Citation

Mercer, Molly, The Fleeting Effects of Disclosure Forthcomingness on Management's Reporting Credibility. Available at SSRN: https://ssrn.com/abstract=581202

Molly Mercer (Contact Author)

DePaul University ( email )

1 E Jackson Blvd Suite 6000
Chicago, IL 60604
United States
(312)362-8956 (Phone)

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