This study examines information disclosures about non-announcing firms' following the earnings release by another firm in the same industry. It provides indirect evidence (through stock price changes) that the information disclosed about non-announcing firms is significant only when announcing firms convey bad news through their earnings releases and when non-announcing firms are large. This finding provides support to Verrecchia's (1983) theory which predicts that in the presence of disclosure related costs, full revelation of managers' private information (as shown in the Grossman [1981]-Milgrom [1981] world) does not obtain. Instead, managers use discretion in disclosing their private information.
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