This paper provides evidence on the voluntary disclosure practices of firm managers, focusing on earnings-related disclosures from a random sample of 93 NASDAQ firms during 1981-1990. The key findings include: (i) earnings-related voluntary disclosures are infrequent, with only one disclosure per ten quarterly earnings announcements on average; (ii) good news disclosures are typically point or range estimates of annual earnings-per-share (EPS), while bad news disclosures are more likely to be qualitative and relate to current period's quarterly earnings; (iii) the stock price response to bad news disclosures is larger in magnitude than to good news disclosures, with an average abnormal return of -4.48% for bad news versus 1.85% for good news; and (iv) the frequency of preemptive corporate disclosures for large negative earnings surprises is relatively high (20-25 percent), but not otherwise. The evidence supports the idea that managers face an asymmetric loss function in deciding on voluntary disclosure policies. They bear large costs when investors are surprised by large negative earnings news, but not otherwise. This is attributed to U.S. securities laws, which allow stockholders to sue firms and their managers for failing to promptly disclose important earnings news. Another explanation is that investors dislike large negative surprises and impose non-legal costs on managers who are less than candid about potential earnings problems. The paper argues that securities laws asymmetrically motivate managers to disclose bad, but not good, earnings news earlier than required. This is due to the legal incentives that arise from the possibility of lawsuits following large stock price declines. The law provides a framework where managers are liable for omissions if they fail to disclose material information, especially when there is a large stock price decline. This leads to managers preempting bad news disclosures to avoid legal costs. The paper also highlights that managers may have reputational reasons for preempting bad news, as investors and analysts may impose costs on firms that fail to communicate impending bad news. The evidence suggests that managers are more likely to preempt bad earnings news than good earnings news, as the legal and reputational costs of not disclosing bad news are higher. The paper concludes that the legal liability argument is consistent with the observed patterns of voluntary disclosure, and that the asymmetry in disclosure behavior is due to the legal incentives and the potential for lawsuits following large negative earnings surprises. The findings have implications for future research on discretionary disclosure and the role of securities laws in shaping corporate behavior.This paper provides evidence on the voluntary disclosure practices of firm managers, focusing on earnings-related disclosures from a random sample of 93 NASDAQ firms during 1981-1990. The key findings include: (i) earnings-related voluntary disclosures are infrequent, with only one disclosure per ten quarterly earnings announcements on average; (ii) good news disclosures are typically point or range estimates of annual earnings-per-share (EPS), while bad news disclosures are more likely to be qualitative and relate to current period's quarterly earnings; (iii) the stock price response to bad news disclosures is larger in magnitude than to good news disclosures, with an average abnormal return of -4.48% for bad news versus 1.85% for good news; and (iv) the frequency of preemptive corporate disclosures for large negative earnings surprises is relatively high (20-25 percent), but not otherwise. The evidence supports the idea that managers face an asymmetric loss function in deciding on voluntary disclosure policies. They bear large costs when investors are surprised by large negative earnings news, but not otherwise. This is attributed to U.S. securities laws, which allow stockholders to sue firms and their managers for failing to promptly disclose important earnings news. Another explanation is that investors dislike large negative surprises and impose non-legal costs on managers who are less than candid about potential earnings problems. The paper argues that securities laws asymmetrically motivate managers to disclose bad, but not good, earnings news earlier than required. This is due to the legal incentives that arise from the possibility of lawsuits following large stock price declines. The law provides a framework where managers are liable for omissions if they fail to disclose material information, especially when there is a large stock price decline. This leads to managers preempting bad news disclosures to avoid legal costs. The paper also highlights that managers may have reputational reasons for preempting bad news, as investors and analysts may impose costs on firms that fail to communicate impending bad news. The evidence suggests that managers are more likely to preempt bad earnings news than good earnings news, as the legal and reputational costs of not disclosing bad news are higher. The paper concludes that the legal liability argument is consistent with the observed patterns of voluntary disclosure, and that the asymmetry in disclosure behavior is due to the legal incentives and the potential for lawsuits following large negative earnings surprises. The findings have implications for future research on discretionary disclosure and the role of securities laws in shaping corporate behavior.