COVID‐19, Board of Directors and Pessimism in Annual Reports: An Intention to Mitigate Litigation Risk
研究英国上市公司2020年年报中新冠疫情披露与悲观语调的关系，发现管理层通过悲观披露降低诉讼风险，且董事会规模和独立性会增强这种策略。
ABSTRACT This study examines the impact of corporate COVID‐19 disclosure on the negative tone (pessimism) in annual reports. We also investigate how board size and board independence influence pessimism in annual reports. Using a U.K. sample from 2020, we employ various techniques to explore the COVID‐19 disclosure‐pessimism nexus. Our findings, supported by Tobit regression and a two‐stage least squares (2SLS) model, reveal a positive association between COVID‐19 disclosure and pessimism in annual reports. We observe that managers tend to disclose COVID‐19 information pessimistically as a risk mitigation strategy, aiming to prevent future earning shocks and potential litigation costs. Interestingly, our results also indicate that large boards and independent directors can bolster governance power, safeguarding firms against potential litigation costs by increasing pessimism in annual reports, both during and beyond the COVID‐19 pandemic.