Manipulation in Voluntary Disclosure: Evidence from 8-Ks

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Sean Cao

Paper Title: Manipulation in Voluntary Disclosure: Evidence from 8-Ks

Speaker: Sean Cao, University of Maryland

Time and Date: 12 – 1 pm, Wednesday 22 March 2023 (Australian Eastern Daylight Time)

Venue: Face-to-face seminar in room CB06.06.123, Level 6, Building 6, University of Technology Sydney, 702-730 Harris Street, Broadway, Sydney, Australia (Map of campus)

Abstract:  Despite the importance of Form 8-K in corporate disclosure, the SEC provides only a 64-word guidance for the Item 8.01 (a catch-all “other events” item) in its 24-page instruction for 8-K filings. As a result, Item 8.01 may be subject to manipulation due to its voluntary nature and vague guidance. We find that, consistent with disclosure manipulation in Item 8.01, higher sentiment of Item 8.01 causes higher announcement returns and a subsequent price correction (reversal) in the post-announcement window. Higher sentiment of Item 8.01 also predicts lower future operational performance. In contrast, we do not observe these patterns for non-8.01 items in 8-K. Further analyses show that the disclosure manipulation in Item 8.01 is more pronounced when there is less institutional monitoring or greater retail 8-K readership. The manipulation is also more pronounced prior to corporate events in which firms or managers themselves can benefit from temporarily higher or lower stock prices, suggesting that the disclosure manipulation is an opportunistic behavior of firm managers.

You can also keep up-to-date on information about our seminar series by following our LinkedIn page or checking out our seminar webpage.
If you would like to be removed from our seminar mailing list, please click here.

Co-ordinator: Kenny Phua
Enquiries: Chloe Qu

Back to Finance seminars
Acknowledgement of Country

UTS acknowledges the Gadigal people of the Eora Nation, the Boorooberongal people of the Dharug Nation, the Bidiagal people and the Gamaygal people, upon whose ancestral lands our university stands. We would also like to pay respect to the Elders both past and present, acknowledging them as the traditional custodians of knowledge for these lands.