Earnings Asymmetric Timeliness and Shareholder Distributions
Richard M. Frankel
Washington University in Saint Louis - Olin Business School
Saint Louis University
Singapore Management University
We study whether more asymmetrically timely earnings constrain payouts to shareholders in the presence of bad news. Our goal is to provide evidence on the ex post contracting benefits of accounting conservatism. We distinguish between cash flow asymmetric timeliness and accrual asymmetric timeliness to examine how each relates to asymmetric sensitivity of shareholder payouts. We find that only the asymmetric timeliness of cash flows is significantly related to the asymmetric sensitivity of shareholder payouts. Other measures of conservatism (earnings skewness and accumulated nonoperating accruals) are also not significantly related to the sensitivity of shareholder payouts given bad news. These results suggest that accounting policies do not significantly constrain shareholder distributions conditional on news that does not affect cash flows.
Number of Pages in PDF File: 49
Keywords: Asymmetric timeliness, shareholder distributions
JEL Classification: M41, M44, G32, G35working papers series
Date posted: July 10, 2008 ; Last revised: September 1, 2008
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 3.062 seconds