ABSTRACT: Beginning with Patell and Wolfson (1982), several papers have documented that earnings announcements made after the market closes and/or on Fridays tend to contain worse earnings news than those made at other times. One hypothesis is that opportunistic managers release earnings at these times of decreased media attention to “hide” their bad news and reduce the associated market penalty. Using firm‐level tests that focus on only those firms that switch their disclosure timing (rather than consistently report at the same time), we find no evidence that managers opportunistically report worse news after the market closes or on Fridays. We then explore other determinants of the timing decision, including the more benign hypothesis that managers with worse earnings news release earnings after the market closes to more broadly disseminate the information. Consistent with desiring more time for the market to assimilate the announcement, we find some evidence that more complex firms tend to announce earnings after the market closes. We also find that these announcements are associated with greater abnormal volume, possibly indicating a successful dissemination strategy. We also find that the corporate headquarters location, the size of the firm, the number of analysts covering the firm, and industry membership are all significant explanatory variables for the timing decision. Overall, our findings are consistent with efficient capital markets that are effective at monitoring new information, regardless of the time of the announcement.
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1 January 2009
Research Article|
January 01 2009
The Timing of Earnings Announcements: An Examination of the Strategic Disclosure Hypothesis
Matthew J. Magilke
Matthew J. Magilke
The University of Utah.
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Online Issn: 1558-7967
Print Issn: 0001-4826
American Accounting Association
2009
The Accounting Review (2009) 84 (1): 157–182.
Citation
Jeffrey T. Doyle, Matthew J. Magilke; The Timing of Earnings Announcements: An Examination of the Strategic Disclosure Hypothesis. The Accounting Review 1 January 2009; 84 (1): 157–182. https://doi.org/10.2308/accr.2009.84.1.157
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