22nd London Business School Accounting Symposium

Accepted Papers

The following papers have been accepted for presentation at the 2025 Accounting Symposium. The presenting author in each case is marked with an asterisk.

1. When Micro Firms Speak Macro: Evidence on Firms’ Macroeconomic Disclosures - Cameron Holstead (RPC Consulting), Alon Kalay (Michigan State University), Gil Sadka (University of Texas at Dallas) and Federico Siano* (University of Texas at Dallas)

Abstract: This study examines the information content of macroeconomic disclosures within 10-K reports. We document that macroeconomic disclosures are: (i) concentrated in the MD&A and Risk Factor sections of the 10-K after 2005; (ii) rise over time, consistent with the documented increase in the role of the macroeconomy in explaining firm-level performance; (iii) provide ex-ante information regarding both the nature of aggregate shocks and firms’ time-varying sensitivity to the different shocks; and (iv) capture firms’ priced systematic risk. Consistent with the information being timely and incremental, we find that investors respond to 10-K macroeconomic disclosures. Overall, we demonstrate that macroeconomic disclosures offer an effective means of estimating firms’ time-varying exposure to varying macroeconomic conditions, thereby providing valuable insights into systematic risk.

2. Beyond Dissemination: Social Media as a Disclosure Channel for Original Firm Information - Nathan Marshall* (University of Colorado Boulder), Jacqueline Wegner (University of Southern California) and Sarah Zechman (University of Colorado Boulder)

Abstract: While prior research views social media as a complement to traditional disclosure channels—used to increase dissemination and investor attention—we provide evidence that corporate tweets also frequently serve as a distinct channel through which firms communicate original, market-moving information to investors. First, a large portion of corporate tweets occur on days without concurrent earnings announcements, regulatory filings, or traditional media releases, suggesting firms use social media to share news not yet disclosed elsewhere. Second, intraday trading reactions in the two minutes surrounding corporate tweets are economically meaningful even in the absence of concurrent events, suggesting that investors extract value-relevant information directly from these posts. Third, this effect is particularly pronounced when tweets contain more textual content, numbers, and financial information. Surprisingly, despite the apparent materiality of corporate tweets, few firms explicitly designate Twitter as a recognized channel in regulatory filings, as required by the SEC. Moreover, we find no significant change in investor response or tweet content following formal designation or informal mention of Twitter in firm regulatory filings. This disconnect raises questions about whether Regulation Fair Disclosure is effective for social media.

3. Whispering Progress: Fear of Automation and Voluntary Disclosure - Jun Oh (Purdue University) and Guoman She* (University of Hong Kong)

Abstract: We provide evidence that firms tailor their disclosure policies to achieve the objectives of task automation and workforce stability. Using local cable news transcripts to measure the fear of job displacement due to automation, we find that firms reduce public disclosures about their automation strategies when automation fear intensifies. The diminished disclosure is more pronounced in industries with occupations more susceptible to displacement and when unfavorable employee reactions are more likely. To compensate for the reduction in public information provision, firms increase private communication with investors. Overall, our findings shed light on the trade-offs between maintaining transparency and mitigating adverse employee responses in the era of rapid advancement in automation technologies.

4. Competitive Externalities of US Government Subsidies - Elisa Casi (Norwegian School of Economics), Costanza Cincotta (Norwegian School of Economics) and Allison Koester* (Georgetown University)

Abstract: We study the competitive effects of US government subsidies to firms. Subsidies reduce the costs that subsidized firms incur when implementing their competitive strategies, which can lead to negative externalities for non-subsidized firms. Using a novel dataset that tracks US federal, state, and municipal government subsidies to US publicly traded firms over two decades, we predict and find evidence consistent with subsidies negatively impacting non-subsidized firms’ market share and financial performance. Inferences are robust to controlling for a firm’s probability of being subsidized and to a stacked cohort difference-in-differences research design. These negative relations are stronger for non-subsidized firms operating in less competitive product markets and facing greater financial constraints. We also find that subsidies serve as an attractive market force, encouraging product market entry and discouraging product market exit. Our study sheds light on the negative competitive externalities of government subsidies to firms.

5. Country-Specific Sentiment and Geographic Segment Disclosure - Stephanie Dong (University of Rochester), Joanna Wu* (University of Rochester) and Xiaoxi Wu (Bocconi University)

Abstract: We examine the association between country-specific sentiment and firm geographic segment disclosure. We predict that when the American public views a foreign country unfavorably, U.S. firms adopt a “lying low” strategy and reduce disclosures about their geographic segments in that foreign country. We find evidence consistent with this prediction on both the intensive and the extensive margins. For the intensive margin, we show that when unfavorability is high, firms disclose fewer financial statement line items for segments in that country, particularly when the segment generates substantial sales and, hence, is likely to draw public scrutiny. We identify political costs, proxied by U.S. government sanctions against a foreign country and the related enforcement actions, as a mechanism. We also observe this strategy in segment profitability disclosure and segment guidance. For the extensive margin, higher country unfavorability is associated with a higher likelihood of segment aggregation, where firms provide segment disclosures for a geographic region encompassing the foreign country rather than for the country itself.

6. Who Gets the Benefit of the Doubt? CEO Gender and News About Firm Performance - Marcela Carvalho* (London Business School)

Abstract: I show that financial markets react asymmetrically to bad news about firm performance depending on whether it is delivered by male or female CEOs. This asymmetry manifests itself in analysts’ forecasts, stock returns on earnings announcement days, and even in the tone that analysts adopt in earnings conference calls. I argue that these patterns have a common origin in a reduced skepticism towards male CEOs. To make this case, I first document that analysts' beliefs about firm performance systematically under-react to bad news from male-led companies relative to the rational expectations benchmark, whereas they adjust their expectations rationally to similar bad news from female-led companies. Next, I show that investors also display this biased reaction to news, with stock returns reacting less negatively to negative surprises from male-led companies relative to their female-led peers on earnings announcement days. I then shed light on the underlying mechanism by constructing a text-based measure of disagreement from earnings conference calls. After negative surprises, analysts express less disagreement with the narrative conveyed by male-led firms relative to their female-led peers. This effect is entirely concentrated amongst male analysts, who represent, on average, more than 85% of the participants in these calls.