Can managers obtain more useful feedback from capital markets by disclosing pieces of information separately and at different times instead of bundling the information and releasing it at once? It is well known that capital markets’ response to firms’ announcements may reveal useful information for corporate managers, especially if the success of an investment opportunity depends on external factors, such as the position of competitors or expectations about consumer demand. In a recent study, we document that the extent to which managers can extract valuable signals from stock prices may depend on how much information is released simultaneously.

Consider a … Read more