RESEARCH ARTICLE
Respond or not? Analyst recommendation and companies' press releases after adverse events
Tiffany Chiu,
Victoria Chiu,
Aiguo Wang,
Tawei Wang,
Yunsen Wang,
Tiffany Chiu
School of Business, State University of New York at New Paltz, New Paltz, New York, USA
Search for more papers by this authorVictoria Chiu
School of Business, State University of New York at Oswego, Oswego, New York, USA
Search for more papers by this authorAiguo Wang
School of Accountancy, Shandong University of Finance and Economics, Jinan, China
Search for more papers by this authorCorresponding Author
Tawei Wang
School of Accountancy & MIS, DePaul University, Chicago, Illinois, USA
Correspondence
Tawei Wang, School of Accountancy & MIS, DePaul University, 1 E Jackson Blvd, Suite 6000, Chicago, IL 60604, USA.
Email: [email protected]
Search for more papers by this authorYunsen Wang
Department of Accounting and Finance, Feliciano School of Business, Montclair State University, Montclair, New Jersey, USA
Search for more papers by this authorTiffany Chiu,
Victoria Chiu,
Aiguo Wang,
Tawei Wang,
Yunsen Wang,
Tiffany Chiu
School of Business, State University of New York at New Paltz, New Paltz, New York, USA
Search for more papers by this authorVictoria Chiu
School of Business, State University of New York at Oswego, Oswego, New York, USA
Search for more papers by this authorAiguo Wang
School of Accountancy, Shandong University of Finance and Economics, Jinan, China
Search for more papers by this authorCorresponding Author
Tawei Wang
School of Accountancy & MIS, DePaul University, Chicago, Illinois, USA
Correspondence
Tawei Wang, School of Accountancy & MIS, DePaul University, 1 E Jackson Blvd, Suite 6000, Chicago, IL 60604, USA.
Email: [email protected]
Search for more papers by this authorYunsen Wang
Department of Accounting and Finance, Feliciano School of Business, Montclair State University, Montclair, New Jersey, USA
Search for more papers by this authorFirst published: 28 April 2024
Abstract
This study examines whether management responds to adverse events and how the press releases after adverse events are associated with analyst recommendation. Using Securities Exchange Act of 1934 Section 10b lawsuits – manipulative and deceptive practices in securities trading – as the proxy for adverse events, we show that companies do not always address the events. However, by issuing a press release within 2 days after the event, the negative effect of the lawsuit on analyst recommendation is smaller. This study advances our understanding in responding to adverse events and provides practical implications for managers.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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