Prof. Yashu DONG, Associate Professor, Shanghai University of Finance and Economics
Date: 14 April 2023 (Friday)
Time: 3:00 pm – 4:30 pm
Venue: E22-1065
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Online registration: https://umac.au1.qualtrics.com/jfe/form/SV_cI2lmIxrdcfgyNM
Abstract
This paper explores whether managers strategically time the dissemination of bad news on sunny days to leverage positive investor mood. Our empirical evidence suggests that managers are more likely to announce bad news on sunny days and tend to reschedule bad news earnings announcements from cloudy days to sunny days when accurate weather forecasts are available. Further analysis shows that the market reacts more negatively to bad news released on non sunny days compared with news released on sunny days, and the post earnings announcement drift is lower for bad news announced on non sunny days than on sunny days. In addition, we find that the strategic disclosure of bad news (i.e., disclosing bad news on sunny days) is not followed by more insider selling, but is more likely to be driven by firms’ fear of high litigation risks. Cross sectional tests show that when the market sentiment is low and when there are fewer sunny days around an earnings announcement date, managers are more likely to time their release of bad earnings news to coincide with sunny days. We also find that strategical disclosure on a sunny day only occurs when there is no prior earnings release date pattern. In summary, our findings suggest that managers consider investor mood in their information dissemination strategies and that litigation concerns are the main driver behind the strategic release of bad news on sunny days.
Speaker
Prof. Yashu DONG is an Associate Professor of School of Accountancy in Shanghai University of Finance and Economics, and received her PhD in Accounting from Chinese University of Hong Kong (CUHK). Her research interests focus on Financial Disclosure, Fundamentals and Accounting Properties, Accounting issues in the Globalized Business Environment, Debt Contracting.
All are welcome!
