Wait, What? The Consequences of Not Disclosing Feedback-Stimulating Information

Recent evidence suggests that managers use voluntary CAPEX guidance to stimulate market feedback by incentivizing informed trading in their stock prices. We show a related decrease in nondisclosing firms' informed trading measures. The reduction in informed trading is pronounced in unexpected nondisclosure, consistent with the interpretation that traders perceive nondisclosure as indicating low gains from informed trading. Less informed trading is associated with a reduction in investment-q sensitivity and future performance for nondisclosing firms. Overall, we document a novel link between managers' strategic disclosure decisions, the feedback channel, and real effects