Abstract This research considers the incentive for division managers to delay the release of information that shows the division in a bad light. While central management desires to tailor divisional investment based on the division's prospects, division managers prefer higher levels of investment, without regard to divisional prospects. A manager receives information about division prospects at a random point during the period. It is predicted that managers will release "good news" when observed but will delay "bad news." However, the threshold separating good and bad news will change over time, such that all news will be voluntarily reported by the end of the period. The results support the qualitative nature of the model. However, the unraveling of disclosure is not as complete as predicted.
King et al. (Sun,) studied this question.
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