Managers' Voluntary Disclosure Decisions and Business Press Attention

Abstract

I investigate the relation between business press attention and the incidence and properties of managers' voluntary disclosures. Specifically, I examine managers' disclosure responses to a bad news event: material lawsuits against the firm. I posit that managers' disclosure decisions are affected by press attention of this event, since press attention draws additional stakeholders' attention and increases information demand. Examining managers' voluntary Form 8-K Item 8.01 filings, I find that both anticipated and actual press coverage of the lawsuit event are positively associated with the likelihood and timeliness of these filings. Moreover, I find that press attention is associated with several textual characteristics of the filings, including length, tone, and complexity. My study extends a growing literature on the monitoring role of the press and suggests that managers' disclosures of bad news respond to anticipated and actual press scrutiny.