Strategic Use of Volume of Financial Items in 10-K Reports

We investigate whether firms limit the volume of financial items in annual reports (including statements and footnotes) to obfuscate poor future firm performance, how investors react this reduced volume. estimate abnormal capture managers’ discretion over reporting 10-K find that abnormally low predicts earnings. This relation is more pronounced where market has difficulty detecting managerial intervention disclosure process. also negative returns, suggesting managers benefit from disclosing fewer by delaying incorporation bad news into stock prices. Further corroborating our results, we when there exist strong incentives withhold manipulate investor perceptions upward. Overall, evidence consistent with notion attempt performance inflate current prices 10-K.