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Short Selling Pressure, Stock Price Behavior, And Management Forecast Precision: Evidence From A Natural Experiment, Yinghua Li, Liandong Zhang
Short Selling Pressure, Stock Price Behavior, And Management Forecast Precision: Evidence From A Natural Experiment, Yinghua Li, Liandong Zhang
Research Collection School Of Accountancy
Using a natural experiment (Regulation SHO), we show that short selling pressure and consequent stock price behavior have a causal effect on managers' voluntary disclosure choices. Specifically, we find that managers respond to a positive exogenous shock to short selling pressure and price sensitivity to bad news by reducing the precision of bad news forecasts. This finding on management forecasts appears to be generalizable to other corporate disclosures. In particular, we find that, in response to increased short selling pressure, managers also reduce the readability (or increase the fuzziness) of bad news annual reports. Overall, our results suggest that maintaining …
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Research Collection School Of Accountancy
Managers have great discretion in determining forecast characteristics, butlittle is known about how managerial incentives affect these characteristics. This paperexamines whether managers strategically choose forecast precision for self-servingpurposes. Building on the prior finding that the market reaction to vague forecasts isweaker than its reaction to precise forecasts, we find that for management forecastsdisclosed before insider sales, more positive (negative) news forecasts are more (less)precise than other management forecasts. The opposite applies to managementforecasts disclosed before insider purchases. These results are consistent withmanagers strategically choosing forecast precision to increase stock prices beforeinsider sales and to decrease stock prices before insider purchases. …
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Research Collection School Of Accountancy
Managers have great discretion in determining forecast characteristics, but little is known about how managerial incentives affect these characteristics. This paper examines whether managers strategically choose forecast precision for self-serving purposes. Building on the prior finding that the market reaction to vague forecasts is weaker than its reaction to precise forecasts, we find that for management forecasts disclosed before insider sales, more positive (negative) news forecasts are more (less) precise than other management forecasts. The opposite applies to management forecasts disclosed before insider purchases. These results are consistent with managers strategically choosing forecast precision to increase stock prices before insider …
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Managerial Incentives And Management Forecast Precision, Qiang Cheng, Ting Luo, Heng Yue
Research Collection School Of Accountancy
Managers have great discretion in determining management forecast characteristics, but little is known about how managerial incentives affect these characteristics. In this paper, we examine whether managers strategically choose the precision of their earnings forecasts for self-serving purposes. Building on prior research demonstrating that the market reaction to vague management forecasts is weaker than its reaction to precise forecasts, we find that for management forecasts disclosed before insider sales, more positive (negative) news forecasts are more (less) precise than other management forecasts. The opposite applies to management forecasts disclosed before insider purchases. These results are consistent with managers strategically choosing …