Do Managers Withhold Bad News?
Article first published online: 22 DEC 2008
©, University of Chicago on behalf of the Institute of Professional Accounting, 2008
Journal of Accounting Research
Volume 47, Issue 1, pages 241–276, March 2009
How to Cite
KOTHARI, S. P., SHU, S. and WYSOCKI, P. D. (2009), Do Managers Withhold Bad News?. Journal of Accounting Research, 47: 241–276. doi: 10.1111/j.1475-679X.2008.00318.x
- Issue published online: 16 JAN 2009
- Article first published online: 22 DEC 2008
- Received 11 October 2005; accepted 16 August 2008
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.