It’s also possible they rationalize it in some way that they’re “protecting their employees” from the bad news. In practice people like to be clued in to the truth and are more likely to respond positively to honesty in my experience.

There was a period where it was a requirement for an executive that they be credible and have a solid track record of under promising, over delivering, before they would ever be considered for leadership. Part of that comes with the experience to know (as in know in their bones, from direct experience) how important it is to be straightforward while not causing panic, and to set a solid and realistic direction instead of lying about it.

People required that of their leaders because they had seen and felt the anguish and loss that doing otherwise causes when it is something important. We've had a insane run of peace and prosperity, and it's easy to forget that and take the fluffy fun face instead.