No. 77: Wait, what? The consequences of not disclosing feedback-stimulating information

Year: 2022

Type: Working Paper

Open Science:

Bronze

Abstract

Recent evidence suggests that managers use voluntary CAPEX guidance to stimulate market feedback by incentivizing informed trading in their stock prices. We show a related decrease in nondisclosing firms’ informed trading measures. The reduction in informed trading is pronounced in unexpected nondisclosure, consistent with the interpretation that traders perceive nondisclosure as indicating low gains from informed trading. Less informed trading is associated with a reduction in investment-q sensitivity and future performance for nondisclosing firms. Overall, we document a novel link between managers’ strategic disclosure decisions, the feedback channel, and real effects.

Publication Information

TRR 266 researchers

Tanja Keeve

External researchers

Matthias Lassak

DOI

DOI Link

Open Science

To cite this article

Keeve, T., & Lassak, M. (2022). Wait, what? The consequences of not disclosing feedback-stimulating information. TRR 266 Accounting for Transparency Working Paper Series No. 77. https://dx.doi.org/10.2139/ssrn.4040976

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.