Why Firms Announce Good News Late: Earnings Management and Financial Reporting Timeliness*
成果类型：
Article
署名作者：
Kim, Mark P.; Pierce, Spencer R.; Yeung, Ira
署名单位：
University of California System; University of California Los Angeles; State University System of Florida; Florida State University; University of British Columbia
刊物名称：
CONTEMPORARY ACCOUNTING RESEARCH
ISSN/ISSBN：
0823-9150
DOI：
10.1111/1911-3846.12695
发表日期：
2021
页码：
2691-2722
关键词：
STOCK-PRICE REACTION
EFFECTIVE TAX RATES
analysts
expense
income
IMPACT
INFORMATION
valuation
forecasts
investors
摘要：
Prior studies find that delayed earnings announcements tend to communicate unfavorable news, and investors react negatively when firms delay earnings announcements. However, these findings do not explain why investors discount delayed earnings, even after controlling for the earnings news, and why firms sometimes announce good news late. Motivated by theory from Trueman (1990) that attempts to explain these phenomena, we examine whether announcement delays indicate earnings management. We predict and find that good news firms with higher discretionary accruals are more likely to announce earnings late. Consistent with post fiscal year-end activities driving announcement delays, we fail to find a relation between measures of real earnings management and late announcements. Using a last-chance earnings management measure based on tax expense manipulation, we also predict and find strong evidence that good news firms engaging in last-chance earnings management are more likely to delay earnings announcements. Consistent with Trueman's (1990) theory that earnings management explains why investors discount delayed earnings announcements, we find that, on average, earnings announcement returns are 1.4% lower for late announcers relying on last-chance earnings management to report good news. Overall, our findings suggest that announcement delays provide information about not only the sign of the earnings news but also the potential for earnings management.