Outbreak risk, managerial distraction, and corporate information disclosure: Evidence from the COVID-19 pandemic

To fill the gaps between managerial distraction and disclosure quality of management earnings forecasts (MEFs), we examine the effects of managerial selective attention resulting from the COVID-19 pandemic. Using this pandemic in 2020 as an adverse shock potentially causing managerial distraction, results based on a difference-in-differences estimation suggest that managerial distraction had a negative effect on MEFs and affected forecast quality by increasing work burden and perceptual narrowing among managers, while cash reserves demonstrated a preventive function and alleviated such adverse effects. Our findings are robust, as supported by tests that address potential measurement errors.