Restrictions on Managers' Outside Employment Opportunities and Asymmetric Disclosure of Bad versus Good News

• 成果类型: Article
• 署名作者: Ali, Ashiq; Li, Ningzhong; Zhang, Weining
• 署名单位: University of Texas System; University of Texas Dallas
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52314
• 发表日期: 2019
• 页码: 1-25
• 关键词: executive-compensation; corporate governance; career concerns; TRADE SECRETS; performance; DIRECTORS; ability; MARKET; incentives; turnover

摘要

This study examines the effect of restrictions on managers' outside employment opportunities on voluntary corporate disclosure. The recognition of the Inevitable Disclosure Doctrine (IDD) by courts in the U.S. states in which the firms are headquartered places greater restrictions on their managers from joining or forming a rival company. We find that, on average, the IDD adoption increases the asymmetric withholding of bad news. We further show that the IDD adoption increases the asymmetric withholding of bad news relative to good news for firms whose managers are mainly concerned about losing their current job. However, an opposite effect is observed for firms whose managers are mainly interested in seeking promotion elsewhere. Furthermore, these effects are less pronounced for firms subject to greater monitoring of their disclosure policy. These results suggest that managers' career concerns affect corporate disclosure policy, and the effect varies with the type of career concerns.