Flu Fallout: Information Production Constraints and Corporate Disclosure

An investigation of influenza epidemic data reveals that corporate information production restrictions affect disclosure policy. In locations with significant flu activity, corporations offer more long-term earnings estimates but fewer short-term ones. The complexity of information creation, managers’ reputational concerns, and prediction horizon change costs affect these consequences. Interestingly, business performance and information uncertainty do not influence forecast horizon adjustments. This shows that managers strategically weigh the costs of low-quality projections against not providing them.

Image courtesy of interviewee. January 9, 2024

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