Earnings Asymmetric Timeliness and Shareholder Distributions

49 Pages Posted: 10 Jul 2008 Last revised: 14 Nov 2013

See all articles by Richard M. Frankel

Richard M. Frankel

Washington University in Saint Louis - Olin Business School

Yan Sun

Saint Louis University

Rong Wang

Singapore Management University; Singapore Management University - Lee Kong Chian School of Business

Date Written: July 2008

Abstract

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.

Keywords: Asymmetric timeliness, shareholder distributions

JEL Classification: M41, M44, G32, G35

Suggested Citation

Frankel, Richard M. and Sun, Yan and Wang, Rong, Earnings Asymmetric Timeliness and Shareholder Distributions (July 2008). Available at SSRN: https://ssrn.com/abstract=1157547 or http://dx.doi.org/10.2139/ssrn.1157547

Richard M. Frankel (Contact Author)

Washington University in Saint Louis - Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Yan Sun

Saint Louis University ( email )

3674 Lindell Blvd
St. Louis, MO 63108-3397
United States

Rong Wang

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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