Publication Type

Journal Article

Version

submittedVersion

Publication Date

5-2023

Abstract

Using influenza epidemic data, we examine how constraints on corporate information production affect disclosure policies. We find that firms in areas with higher flu activity are less likely to issue short-run earnings forecasts and more likely to issue long-run earnings forecasts. These results are more pronounced when the information production process is more complex, when managers face a greater reputational loss for issuing low-quality short-run forecasts, and when firms’ costs of switching the forecast horizon are lower. Further analysis implies that the effect of flu activity on these forecast issuance decisions is not driven by firm performance or information uncertainty. Our results suggest that managers do not simply avoid issuing forecasts in response to information production constraints. Instead, they shift the forecast horizon from short-run to long-run, appearing to balance the costs of issuing low-quality forecasts with those of not issuing forecasts at all.

Keywords

Corporate Disclosure, Information production constraints, Flu epidemic, Management forecast

Discipline

Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Journal of Accounting Research

Volume

61

Issue

4

First Page

1063

Last Page

1108

ISSN

0021-8456

Identifier

https://doi.org/10.1111/1475-679X.12486

Publisher

Wiley

Copyright Owner and License

authors

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