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Real-time revenue and firm disclosure

Author

Listed:
  • Elizabeth Blankespoor

    (University of Washington, Foster School of Business)

  • Bradley E. Hendricks

    (University of North Carolina at Chapel Hill, Kenan-Flagler Business School)

  • Joseph Piotroski

    (Stanford University, Graduate School of Business)

  • Christina Synn

    (American University, Kogod School of Business)

Abstract

We examine firm disclosure choice when information is received on a real-time, continuous basis. We use transaction-level credit and debit card sales for a sample of retail firms to construct a weekly measure of abnormal revenue for each firm. We validate the informativeness of this abnormal real-time revenue information, confirming its positive correlation with abnormal returns, unexpected revenue realizations, and management revenue forecast news. Using revenue forecasts, we find that firms are less likely to disclose abnormally negative news early in the quarter. As the quarter progresses, firms reduce their withholding of negative news. These results are consistent with impending earnings announcements disciplining managers to provide negative news. This pattern of initial withholding and then disclosure exists primarily in firms with high analyst coverage, high institutional ownership, or high litigation risk. Finally, we find increased insider stock sales in weeks with abnormally negative news and no firm disclosure. Overall, our study provides evidence of the informativeness of real-time information and manager discretion in its release.

Suggested Citation

  • Elizabeth Blankespoor & Bradley E. Hendricks & Joseph Piotroski & Christina Synn, 2022. "Real-time revenue and firm disclosure," Review of Accounting Studies, Springer, vol. 27(3), pages 1079-1116, September.
    • Handle: RePEc:spr:reaccs:v:27:y:2022:i:3:d:10.1007_s11142-022-09703-2
    DOI: 10.1007/s11142-022-09703-2
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