SOME EVIDENCE ON THE NEWS CONTENT OF PRELIMINARY EARNINGS ESTIMATES

• 成果类型: Note
• 署名作者: BAGINSKI, S; HASSELL, J; WAYMIRE, G
• 署名单位: University of Texas System; University of Texas Arlington; Emory University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• 发表日期: 1994
• 页码: 265-271
• 关键词: STOCK RETURNS; disclosure; forecasts; announcements; INFORMATION; Timeliness

摘要

This article provides evidence on the news content of managements' preliminary earnings estimates, which we define as projections of earnings conveyed in expectational language after the end of the reporting period but before the release of final earnings numbers. We examine stock price changes to assess whether a preponderance of these disclosures are interpreted as ''good news'' by investors, and the extent to which good news releases are disclosed earlier than bad news. Associated with preliminary earnings estimates are disclosure and timing issues. While previous theoretical work suggests managers have incentives to suppress or delay disclosure of adverse information (Verrecchia 1983; Dye 1985), studies examining the disclosure issue using management forecasts produced inconsistent results, and results on the timing of corporate earnings announcements are ambiguous. Although there is evidence on the information content of preliminary earnings estimates (Foster 1973), no study has used these data in investigating the relation between corporate disclosure and news content. Preliminary estimates are important because they embody aspects of disclosure choice similar to other voluntary disclosures such as forecasts, and the time lags between preliminary estimates and earnings releases are short, thereby assuring a strong timing aspect to their release. We document significant negative mean abnormal returns associated with the disclosure of preliminary estimates. The median is negative, but not significant at conventional levels. Tests on the timing issue indicate an ambiguous relation between disclosure timing and news content. Preliminary estimates of quarters 1-3 earnings are more likely to be bad news compared to estimates of quarter 4 and annual earnings, but within quarters there is no strong relation between news content and disclosure timing.