Information Overload and Disclosure Smoothing

dc.contributor.author Chapman, Kimball
dc.contributor.author Reiter, Nayana
dc.contributor.author White, Hal
dc.contributor.author Williams, Christopher
dc.date.accessioned 2018-11-27T19:06:18Z
dc.date.available 2018-11-27T19:06:18Z
dc.date.issued 2018-07-23
dc.description.abstract This paper examines whether managers can reduce the detrimental effects of information overload by spreading out, or temporally smoothing, disclosures. In our initial set of analyses, we attempt to identify managerial smoothing behavior. We find that when there are multiple disclosures for the same event date, managers, on average, spread the disclosures out over several days. We also find that managers are more likely to delay a disclosure (from its event date) when there has been a previous disclosure made within the three days before the event date. Finally, we show that managers are more likely to engage in disclosure smoothing when disclosures are longer, when the information environment is more robust, when firm information is complex, when uncertainty is high, and when disclosure news is more positive. In our second set of analyses, we examine whether there are market benefits to disclosure smoothing. Using two different measures of disclosure smoothing, we find that smoothing is associated with increased liquidity, reduced stock price volatility and increased analyst forecast accuracy. Finally, in additional analyses, we show that managers are less likely to engage in smoothing when they have negative news; they also release good news more quickly after bad news. Combined, our results suggest managers smooth disclosures and the smoothing is associated with several beneficial market outcomes.
dc.identifier.uri http://hdl.handle.net/10125/59243
dc.subject Disclosure
dc.subject Information overload
dc.subject liquidity
dc.subject processing costs
dc.title Information Overload and Disclosure Smoothing
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