Do Managers Withhold Bad News?

2008/12/22 by S. P. KOTHARI, S.P. Kothari, SUSAN SHU +3 · 225 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Actuarial science #Advertising #Auditing, Earnings Management, Governance #Business #Corporate Finance and Governance #Economics #Financial Markets and Investment Strategies #History #Monetary economics #News media #Stock (firearms) #Stock price

paper · open access · doi:10.1111/j.1475-679x.2008.00318.x

published in Journal of Accounting Research 47(1), 241-276 (Wiley)

openalex publication_date 2008/12/22 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15

Abstract

ABSTRACT In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average , delays the release of bad news to investors.

Citations

• Equity Incentives and Earnings Management

Cited by

• Attribution Locus and the Timeliness of Long-lived Asset Write-downs
• Autonomous Market Intelligence: Agentic AI Nowcasting Predicts Stock Returns
• How does economic policy uncertainty influence the timeliness of goodwill impairment? Australian evidence
• Aftershock: CEO Great Famine Experience and Stock Price Crash Risk. [europepmc]
• Key Subordinate Executive Governance, CEO Overconfidence, and Accounting Conservatism: From the Perspective of Sustainable Development. [europepmc]
• Green Credit Policy and Corporate Stock Price Crash Risk: Evidence From China. [europepmc]
• Formative experience and stock price crash risk: Evidence from China's "Down to the Countryside" movement. [europepmc]
• The executive pay gap and stock price crash risk: Promotion or suppression? [europepmc]
• The impact of corporate violations on charitable donation behavior. [europepmc]
• Can digital transformation reduce corporate stock price crashes? [europepmc]
• Celebrity CEOs, digital transformation and firm performance in China: the moderating role of controlling shareholders and institutional investors. [europepmc]
• Shareholder heterogeneity, financing constraints, and organizational resilience: Mixed-ownership reform in Chinese private enterprises. [europepmc]
• A double-edged sword: materiality classifications of sustainability topics. [europepmc]
• Competitive threat and strategic disclosure during the IPO quiet period [europepmc]
• Do Firms Provide Informative Disclosures in An Environment of Extreme Uncertainty? Evidence from the COVID-19 Pandemic [europepmc]

Related

• Do Managers Disclose or Withhold Bad News? Evidence from Short Interest
• Do Career Concerns Affect the Delay of Bad News Disclosure?
• With a Grain of Salt: Uncertain Veracity of External News and Firm Disclosures
• Does Silence Speak? An Empirical Analysis of Disclosure Choices During Conference Calls
• Transparency versus Performance in Financial Markets: The Role of CSR Communications