Stock Price Reaction to Evidence of Earnings Management: Implications for Supplementary Financial Disclosure

  title={Stock Price Reaction to Evidence of Earnings Management: Implications for Supplementary Financial Disclosure},
  author={William R. Baber and Shuping Chen and Sok-Hyon Kang},
  journal={Review of Accounting Studies},
  • William R. Baber, Shuping Chen, Sok-Hyon Kang
  • Published 2006
  • Business
  • Review of Accounting Studies
  • We condition security price reactions to quarterly earnings announcements on whether firms disclose supplementary balance sheet and/or cashflow information that can be used to estimate the consequences of earnings management. Disclosure of supplementary information is voluntary, and thus, we consider the possibility that firms that disclose balance sheet and/or cashflow information differ systematically from firms that do not disclose. Results indicate that investors discount evidence of… CONTINUE READING
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