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Respond or not? Analyst recommendation and companies' press releases after adverse events

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Listed:
  • Tiffany Chiu
  • Victoria Chiu
  • Aiguo Wang
  • Tawei Wang
  • Yunsen Wang

Abstract

This study examines whether management responds to adverse events and how the press releases after adverse events are associated with analyst recommendation. Using Securities Exchange Act of 1934 Section 10b lawsuits – manipulative and deceptive practices in securities trading – as the proxy for adverse events, we show that companies do not always address the events. However, by issuing a press release within 2 days after the event, the negative effect of the lawsuit on analyst recommendation is smaller. This study advances our understanding in responding to adverse events and provides practical implications for managers.

Suggested Citation

  • Tiffany Chiu & Victoria Chiu & Aiguo Wang & Tawei Wang & Yunsen Wang, 2024. "Respond or not? Analyst recommendation and companies' press releases after adverse events," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3469-3494, December.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:4:p:3469-3494
    DOI: 10.1111/acfi.13260
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