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
Citation
MA, Yan; MAO, Qian; and HU, Nan.
To protect or to hide: An investigation on corporate redacted disclosure motives under new FAST act regulation. (2024). Emerging Markets Review. 60, 1-18.
Available at: https://ink.library.smu.edu.sg/sis_research/8812
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.ememar.2024.101144