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When do governments "go dark"? Evidence on governments' disclosure choices in periods of uncertainty

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dc.contributor.authorColumbano, Claudio
dc.contributor.authorTrombetta, Marco
dc.contributor.funderSpanish Agency for Research
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2024-07-02T16:11:30Z
dc.date.available2024-07-02T16:11:30Z
dc.date.issued2022-10-20
dc.description.abstractWe examine the effect of uncertainty shocks on the level of fiscal guidance – the guidance issued by governments on the expected evolution of the fiscal and economic outlook. Because uncertainty makes governments’ expectations less precise but potentially more valuable to users, we hypothesize that a disclosure dilemma leads governments to balance a higher demand for guidance with a higher probability of issuing inaccurate forecasts. Using natural disasters to randomize uncertainty shocks in our sample, we find that on average, governments issue less guidance in periods of uncertainty. The effect is driven by a reduction in the number of forecasts on the future evolution of balance sheet items, but only when governments have low refinancing needs and face a relatively quiet bond market. Instead, governments that maintain a stable level of guidance in periods of uncertainty appear to cater to coercive isomorphic pressures stemming from creditors. We further document that the relative ‘transparency’ of governments in periods of uncertainty is negatively related to indicators of fiscal reporting quality. Collectively, the evidence indicates that in the public sector, uncertainty leads to a trade-off between disclosure quantity and quality.
dc.description.sponsorshipThis work was supported by the Spanish Agency for Research (AEI): Grant Number PID2019-111762GB-I00.
dc.formatPDF
dc.identifier.citationColumbano, C., & Trombetta, M. (2022). When do governments ‘go dark'? Evidence on governments’ disclosure choices in periods of uncertainty. European Accounting Review, 31(5), 1119-1148.
dc.identifier.doihttps://doi.org/10.1080/09638180.2022.2118146
dc.identifier.issn0963-8180
dc.identifier.urihttps://hdl.handle.net/20.500.14417/2894
dc.issue.number5
dc.journal.titleEuropean Accounting Review
dc.language.isoeng
dc.licensehttps://creativecommons.org/licenses/by-nc/1.0/legalcode
dc.page.final1148
dc.page.initial1119
dc.page.total1119-1148
dc.publisherTaylor & Francis
dc.relation.departmentAccounting and Management Control
dc.relation.entityIE University
dc.relation.projectIDPID2019-111762GB-I00
dc.relation.schoolIE Business School
dc.rightsAttribution Non Commercial 1.0 Generic
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc/1.0/legalcode
dc.subject.keywordGovernment
dc.subject.keywordUncertainty
dc.subject.keywordAccountability
dc.subject.keywordTransparency
dc.subject.keywordStability and Growth Pact
dc.subject.otherGovernment;Uncertainty;Accountability;Transparency;Stability and Growth Pact
dc.titleWhen do governments "go dark"? Evidence on governments' disclosure choices in periods of uncertainty
dc.typeArticle
dc.volume.number31
dspace.entity.typePublication
relation.isAuthorOfPublication93153f41-861d-41e2-99ea-c2c1b96c7012
relation.isAuthorOfPublication93153f41-861d-41e2-99ea-c2c1b96c7012
relation.isAuthorOfPublication.latestForDiscovery93153f41-861d-41e2-99ea-c2c1b96c7012
relation.isAuthorOfPublication.latestForDiscovery93153f41-861d-41e2-99ea-c2c1b96c7012
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