Working paper
Disclosure Preparation and Managers’ Explanations for Performance
SSRN
10/23/2019
DOI: 10.2139/ssrn.3469813
Abstract
There is considerable variation across firms and settings in the level of advance preparation for disclosures. Differences in disclosure preparation result in different market outcomes, and less preparation results in greater cognitive load for managers when issuing disclosures. Yet, little is known about how greater cognitive load (i.e., lack of time, effort, or ability in disclosure preparation) affects disclosure characteristics. Using two experiments and a survey, we investigate how managers’ explanations for performance differ when issued under greater cognitive load. Our experiments vary cognitive load and task performance and solicit reports explaining the reasons for performance on abstract tasks. We find that participants provide more internal reasons for performance when responding under greater cognitive load following both good and poor performance. A follow-up survey of IROs documents reasons for different amounts of disclosure preparation, as well as potential consequences. Our results shed light on why managers invest in different levels of disclosure preparation and provide evidence on how cognitive load affects disclosure characteristics.
Details
- Title: Subtitle
- Disclosure Preparation and Managers’ Explanations for Performance
- Creators
- Michael T DurneyKristina M Rennekamp
- Resource Type
- Working paper
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.3469813
- Number of pages
- 40 pages
- Language
- English
- Date posted
- 10/23/2019
- Date updated
- 11/19/2021
- Academic Unit
- Accounting
- Record Identifier
- 9984421973002771
Metrics
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