Publication Type

Journal Article

Version

acceptedVersion

Publication Date

6-2024

Abstract

China adopted amendments allowing companies to redact filings without prior approval in 2016. Leveraging this change as a quasi-nature experiment, we explore whether managers utilize redacted information to withhold bad information in the more lenient regulatory environment. Our investigation uncovers a significant shift in managerial behavior: Since 2016, managers incline to employ redactions to obscure negative news rather than safeguarding proprietary data. Furthermore, we find that the poorer firm performance and a higher cost of equity are associated with the redacted disclosures after 2016, suggesting that investors perceive an increase in firm-specific risk attributed to withholding bad news through redactions.

Keywords

Redacted disclosure, Proprietary information, Bad news withholding

Discipline

Corporate Finance | Databases and Information Systems

Research Areas

Information Systems and Management

Publication

Emerging Markets Review

Volume

60

First Page

1

Last Page

18

ISSN

1566-0141

Identifier

10.1016/j.ememar.2024.101144

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.ememar.2024.101144

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