Further Evidence on Nontrading Period Information Release

Posted: 23 Aug 1998

See all articles by Stephen P. Baginski

Stephen P. Baginski

University of Georgia - J.M. Tull School of Accounting

John M. Hassell

Indiana University Kelley School of Business Indianapolis

Donald P. Pagach

North Carolina State University

Abstract

Using a sample of 856 management earnings forecasts, we provide evidence that managers release larger shock earnings forecasts in nontrading periods. Our results do not depend on whether the magnitude of the shock is measured exogenously (unexpected accounting earnings) or endogenously (security market reaction). The timing effects are more pronounced for less precise (i.e., open-interval and closed-interval) forecasts. Also, we provide evidence of an overnight reaction to closed-period management forecast releases. Our results are consistent with explanations for voluntary disclosure that rely on a precommitted policy of information asymmetry reduction (see Diamond 1985; King, Pownall and Waymire 1990). These explanations lead to predictions of strategic timing of greater shocks in the nontrading period in order to provide the less-informed with a period for information evaluation.

JEL Classification: G14

Suggested Citation

Baginski, Stephen P. and Hassell, John M. and Pagach, Donald P., Further Evidence on Nontrading Period Information Release. CONTEMPORARY ACCOUNTING RESEARCH, VOL 12, NO 1, FALL 1996. Available at SSRN: https://ssrn.com/abstract=2501

Stephen P. Baginski (Contact Author)

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

John M. Hassell

Indiana University Kelley School of Business Indianapolis ( email )

801 W. Michigan Street
Indianapolis, IN 46202-5151
United States

Donald P. Pagach

North Carolina State University ( email )

Raleigh, NC 27695-8113
United States
919-515-4447 (Phone)
919-515-4446 (Fax)

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