The Relation Between Earnings Surprises and Voluntary Disclosures of High-tech Firms in Periods of Bad Economic News PDF Download

Author: John J. Shon
Publisher:
ISBN:
Category : Financial statements
Languages : en
Pages : 374

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Author: Douglas J. Skinner
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Author: Raymond Cox
Publisher:
ISBN:
Category :
Languages : en
Pages :

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This study examines whether investors overreact to bad news during good times and under react to bad news during bad times. We examine investors' reaction to bad news during economic cycles for a sample of 445 U.S. firms issuing voluntary disclosures of profit warnings prior to a quarterly earnings per share announcement during the 1995 to 2009 period. We find that the immediate price reaction to a firm's profit warning (bad news) is stronger during periods of economic expansion (good times) than during periods of economic contraction (bad times). However, the reaction is sensitive to the methodology employed and event window selected. We also find less negative stock return reaction during the post Sarbanes-Oxley (SOX) period compared to the pre-SOX period.

Author:
Publisher:
ISBN:
Category : Dissertations, Academic
Languages : en
Pages : 608

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Author: Jennifer Francis
Publisher: Now Publishers Inc
ISBN: 1601981147
Category : Business & Economics
Languages : en
Pages : 97

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This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Author: Yifan Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 57

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We define a delayed disclosure ratio (DD) as the fraction of 10-Q financial statement items that are withheld at the earlier quarterly earnings announcement. We find that higher DD firms have a greater delay in investor and analyst response to earnings surprises: (i) the fraction of total market reaction to quarterly earnings news realized around the earnings announcement (after the 10-Q filing) is smaller (greater), and (ii) analysts are more likely to defer issuing forecasts from immediately after the earnings announcement to after the 10-Q filing. Consistent with our limited attention model predictions, the response catch-up associated with DD is incomplete even after the delayed items are fully disclosed at the 10-Q filing date, and persists until the next earnings announcement date. The return reaction to earnings news over the entire quarter does not vary with DD, so differences in earnings informativeness do not explain the DD effect. Our findings suggest that, for limited attention effects to be mitigated, the timing of disclosures must be coincident with the focal periods--at earnings announcement dates--when investors and analysts are paying the most attention.

Author: United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. Subcommittee on Securities
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 900

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Author: Gregory Smith Miller
Publisher:
ISBN:
Category : Business forecasting
Languages : en
Pages : 198

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Author: Young Jun Cho
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Book Description
We examine the relation between information externalities along the supply chain and voluntary disclosure. Information transfers from a major customer's earnings announcement (EA) can substitute for its supplier's disclosure. Conversely, if the customer's EA increases uncertainties regarding the supplier's future prospects, it can increase the demand for disclosure. After controlling for information incorporated in supplier returns, we find that the supplier is more likely to issue earnings guidance after the customer's EA when the EA news deviates more from the market's expectation. The positive effect of the customer's news on earnings guidance is weaker when common investors, supply-chain analysts, or a common industry allow investors to better understand the value implications of the news, while the effect increases with the importance of the customer to the supplier. The effect is also stronger when the EA news is negative than positive. Collectively, the results suggest that supply-chain relationships influence voluntary disclosure.

Author: Michael Dambra
Publisher:
ISBN:
Category :
Languages : en
Pages : 47

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Book Description
Managers' voluntary disclosure of forward-looking earnings information results in stock prices reflecting that information prior to the fiscal period when the corresponding earnings are announced. We predict that forward-looking management earnings forecasts (MFs) will lead to a weaker relation between contemporaneous returns and earnings, resulting in a predictable attenuation in earnings asymmetric timeliness measured using the Basu (1997) model (and related models). The intuition is that forward-looking disclosures such as MFs decouple the period in which prices reflect the earnings news from the future period in which the actual earnings related to the forecast will be recognized and announced. We find that earnings' asymmetric timeliness is insignificant for firms issuing MFs of future-year earnings. Additional analysis rules out the alternative explanation that these findings are due to differences in the pattern of earnings recognition or total information flow in periods with forward-looking disclosures. An implication of our findings is that, in the presence of forward-looking managerial disclosures such as MFs, research on conservatism should exercise caution when attributing variation in asymmetric timeliness exclusively to the hypothesized determinants of conservatism.