Voluntary and Mandatory Disclosures: Do Managers View Them as Substitutes?

44 Pages Posted: 23 Mar 2017 Last revised: 10 Jul 2019

See all articles by Suzie Noh

Suzie Noh

Stanford Graduate School of Business; Massachusetts Institute of Technology (MIT) - Sloan School of Management

Eric C. So

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Joseph Weber

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: July 1, 2019

Abstract

We examine the relation between firms’ voluntary guidance and mandatory 8K filings. We find a negative relation between guidance and 8Ks, which strengthens following the 2004 expansion of mandatory 8K requirements, consistent with firms using the disclosures as substitutes. Increases in 8Ks coincide with declines in firms’ profits, but this negative relation weakens after the 2004 regulation, consistent with firms broadening the scope of information conveyed through 8Ks. Together, our findings suggest firms became more reliant on 8Ks to convey general types of information after the 2004 regulation, rather than primarily negative news, which reduces their incentives to issue guidance.

JEL Classification: M40, M41

Suggested Citation

Noh, Suzie and So, Eric C. and Weber, Joseph Peter, Voluntary and Mandatory Disclosures: Do Managers View Them as Substitutes? (July 1, 2019). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2939210 or http://dx.doi.org/10.2139/ssrn.2939210

Suzie Noh (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
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Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
Cambridge, MA 02142
United States

Eric C. So

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Joseph Peter Weber

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States
617-253-4310 (Phone)

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