Work

Disclosure Tone and Short-Selling Pressure: Evidence from Regulation-SHO

Year: 2023

Type: article

Abstract: Managers use disclosure tone as a strategic tool to manage investors' expectations and demand for information.I provide evidence that investors' actions can, in turn, exercise a disciplining effect on tone management.Using exogenous relaxation in the short-selling constraints from Regulation-SHO and employing the difference-in-differences design on a propensity-score matched sample, I find that shortselling pressure reduces tone management.Greater short-selling pressure results in less optimism in tone unrelated to fundamentals, and in disclosures about the future rather than the past.Moreover, this reduction in tone management is stronger for firms with higher short-selling constraints pre-Regulation-SHO and for those with overoptimistic and overconfident managers.

Source: European Accounting Review

DOI: 10.1080/09638180.2023.2270655

Author: Ankit Jain

Institution: The University of Queensland

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Funders: Accounting and Finance Association of Australia and New Zealand, University of Queensland, Indian Institute of Management Ahmedabad, Indian Institute of Management Bangalore

OpenAlex ID: W4388283268

FWCI: 5.873

Cites: 76

Cited by: 11

Related to: 10