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Outbreak risk, managerial distraction, and corporate information disclosure: Evidence from the COVID-19 pandemic

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  • Wang, Brian Yutao
  • Xu, Ruiyao
  • Zhang, Jing

Abstract

To fill the gaps between managerial distraction and disclosure quality of management earnings forecasts (MEFs), we examine the effects of managerial selective attention resulting from the COVID-19 pandemic. Using this pandemic in 2020 as an adverse shock potentially causing managerial distraction, results based on a difference-in-differences estimation suggest that managerial distraction had a negative effect on MEFs and affected forecast quality by increasing work burden and perceptual narrowing among managers, while cash reserves demonstrated a preventive function and alleviated such adverse effects. Our findings are robust, as supported by tests that address potential measurement errors.

Suggested Citation

  • Wang, Brian Yutao & Xu, Ruiyao & Zhang, Jing, 2022. "Outbreak risk, managerial distraction, and corporate information disclosure: Evidence from the COVID-19 pandemic," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000312
    DOI: 10.1016/j.pacfin.2022.101736
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    Cited by:

    1. Bedford, Anna & Bugeja, Martin & Ghannam, Samir & Jeganathan, Davina & Ma, Nelson, 2023. "Were CEO pay cuts during the COVID-19 pandemic merely symbolic? Shareholders' reaction and outrage," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    2. Gao, Haoyu & Li, Jinxuan & Wen, Huiyu, 2023. "Bank funding costs during the COVID-19 pandemic: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).

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