Asymmetric Timeliness of Write-Down Reporting: Do Managers Always Withhold Write-Down Information?
Other Title
減損報導之不對稱及時性：經理人對減損總是隱而不報嗎？
Journal
證券市場發展季刊
Journal Volume
34
Journal Issue
2
Start Page
1
End Page
54
ISSN
1023-280X
Date Issued
2022-06
Author(s)
Abstract
This paper focuses on asset write-downs and investigates whether managers make write-down decisions with asymmetric timeliness. Based on the economic rationality incorporated in agency theory, the argument is made here that under different levels of information asymmetry, managers have incentives to report firm-specific and market-wide unfavorable information with differential timeliness. Managers report macroeconomic unfavorable information in a timely fashion, as the transparency involved in such information entails a greater risk of reputation losses and litigation risks resulting from untimely reporting. Low accountability due to lack of control also contributes to managers' early reporting. Furthermore, managers report unfavorable firm-specific factors slowly, as career concerns and risk of punishment for late reporting motivate managers to withhold such information where they are privy to information which outsiders are not. Empirical results suggest that the untimely reporting of firm-specific unfavorable information contributes to two-period recurring write-downs and may provide further evidence of managers' reporting behavior.
Subjects
asymmetric timeliness
unfavorable information
information asymmetry
reporting incentives
asset write-downs
Type
journal article