Three studies on managers' disclosure decisions
type: CreativeWork
description: My first study examines whether and how opioid crisis affects management forecast quality. Lax regulations and the spreading of misinformation by pharmaceutical companies have resulted in a massive increase in opioid prescriptions in the United States, with the abuse of these drugs reaching crisis levels. I examine the effect of local opioid abuse, proxied by the opioid prescription rate in the county in which a firm's headquarters is located, on the quality of management earnings forecasts. I find that firms headquartered in counties of high opioid abuse produce significantly less accurate management earnings forecasts. This result is robust to utilizing the effective anti-opioid legislation across states as a plausibly exogenous variation that limits the prescriptions of opioid. I further find that the negative effect of opioid abuse is stronger for firms operating in more uncertain environments and is mitigated for firms with easier access to opioid treatment and for firms with superior employee welfare. Finally, I show that investors react less strongly to news in forecasts issued by firms located in high opioid areas, consistent with their recognition of the potential adverse effect of opioid abuse on information production within the firm. My second study examines how collusion in product markets affects managers' disclosure strategies and the resultant stock price crash risks. Using the staggered passage of national leniency laws in foreign countries to which United States (US) firms are exposed as a source of exogenous shock that renders cartelization less feasible, this study explores whether and how cartel collusions in product markets affect firms' ex ante expected crash risk, as captured by options' implied volatility smirk. I find investors' ex ante expected crash risk significantly increases when cartelization becomes less feasible. Further analysis shows that the relation between cartelization and crash risk is more evident for firms that are more lik…
abstract: My first study examines whether and how opioid crisis affects management forecast quality. Lax regulations and the spreading of misinformation by pharmaceutical companies have resulted in a massive increase in opioid prescriptions in the United States, with the abuse of these drugs reaching crisis levels. I examine the effect of local opioid abuse, proxied by the opioid prescription rate in the county in which a firm's headquarters is located, on the quality of management earnings forecasts. I find that firms headquartered in counties of high opioid abuse produce significantly less accurate management earnings forecasts. This result is robust to utilizing the effective anti-opioid legislation across states as a plausibly exogenous variation that limits the prescriptions of opioid. I further find that the negative effect of opioid abuse is stronger for firms operating in more uncertain environments and is mitigated for firms with easier access to opioid treatment and for firms with superior employee welfare. Finally, I show that investors react less strongly to news in forecasts issued by firms located in high opioid areas, consistent with their recognition of the potential adverse effect of opioid abuse on information production within the firm. My second study examines how collusion in product markets affects managers' disclosure strategies and the resultant stock price crash risks. Using the staggered passage of national leniency laws in foreign countries to which United States (US) firms are exposed as a source of exogenous shock that renders cartelization less feasible, this study explores whether and how cartel collusions in product markets affect firms' ex ante expected crash risk, as captured by options' implied volatility smirk. I find investors' ex ante expected crash risk significantly increases when cartelization becomes less feasible. Further analysis shows that the relation between cartelization and crash risk is more evident for firms that are more lik…
author: Wang, Dongyue
language: en_AU
date published: 2022
date modified: 2026-07-24T01:07:48Z
provider: Australian Catholic University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Australian Catholic University

PropertyValue
property ID: Handle
value: http://hdl.handle.net/1885/271415