The Timeliness of Half Yearly Earnings Announcements and Stock Returns

Abstract

This paper examines the association between the timeliness of the half‐yearly report for Australian firms and the abnormal stock price behaviour around the time of the announcement. The results support the overseas evidence that reports containing ‘good’ news are released earlier than reports containing ‘bad’ news. The abnormal returns are consistent with the direction and magnitude of the earnings and dividend information. We find no evidence to support the Kross and Schroeder [1984] conclusion that timeliness per se is associated with abnormal returns once appropriate control is made for earnings/dividend information.

Timeliness of Reporting and Earnings Information Transfers

“…This finding contributes to our understanding of the ramifications of earnings announcements and offers insights into potential costs and benefits of devising financial reporting strategies that include timeliness of earnings. NOTES 1 For example, see Givoly and Palmon (1982), Chambers and Penman (1984), Kross and Schroeder (1984), Penman (1984) and Sinclair and Young (1991). 2 Several prior studies explore the effects of managerial discretion for financial reporting.…”

“…Several issues are addressed.First, this study examines the relation between earnings timeliness and information transfers. Prior research shows that early earnings releases yield positive price reactions for disclosing firms (e.g., Givoly and Palmon, 1982;Chambers and Penman, 1984;and Sinclair and Young, 1991). Chambers and Penman (1984) suggest that in a competitive environment, the improved performance of a disclosing firm has negative implications for competitors.…”

“…With regard to the first issue, there is considerable evidence that the order of release is related to announcing firms' price reactions. Specifically, early reports yield positive price reactions, while later releases yield negative reactions (Givoly and Palmon, 1982;Chambers and Penman, 1984;Kross and Schroeder, 1984;and Sinclair and Young, 1991). Givoly and Palmon (1982) infer from this evidence that firms strategically time their earnings releases, and that bad news is delayed in a desire to mitigate its price ramifications (also see Chen and Mohan, 1994).…”

A study on audit report timeliness: The Macedonian Stock Exchange

“…This research analyzes corporate reporting timeliness that may be compromised by lags in publishing audited financial statements. Numerous previous empirical studies consider that the delay of the audit is considered as the greatest determinant of the prompt disclosure of enterprise results [Givoly and Palmon, 1982;Chambers and Penman, 1984;Sinclair and Young, 1991;Kinney and McDaniel, 1993;Han and Wild, 1997].…”

Information Content and Timing of Earnings Announcements

“…The timing literature has provided ample empirical evidence for well‐developed markets (Chambers and Penman, 1984; Kross and Schroder, 1984; Sinclair and Young, 1991; Bowen, Johnson, Shevlin, and Shores, 1992; and Begley and Fischer, 1998). The consensus is that firms announce good news earlier than bad news.…”