The Impact of Litigation Risk on the Strategic Timing of Management Earnings Forecasts

29 Pages Posted: 10 Jun 2015

See all articles by Andrew B. Jackson

Andrew B. Jackson

UNSW Australia Business School, School of Accounting

Gerry Gallery

Queensland University of Technology

Maria Balatbat

UNSW Australia Business School, School of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: June 2015

Abstract

This paper examines whether managers strategically time their earnings forecasts (MEFs) as litigation risk increases. We find as litigation risk increases, the propensity to release a delayed forecast until after the market is closed (AMC) or a Friday decreases but not proportionally more for bad news than for good news. How costly this behaviour is to investors is questionable as share price returns do not reveal any under‐reaction to strategically timed bad news MEF released AMC. We also find evidence consistent with managers timing their MEFs during a natural no‐trading period to better disseminate information.

Keywords: Strategic disclosure, Management earnings forecasts, Disclosure timing, Litigation risk, Continuous disclosure, Regulation

Suggested Citation

Jackson, Andrew B. and Gallery, Gerry Thomas and Balatbat, Maria, The Impact of Litigation Risk on the Strategic Timing of Management Earnings Forecasts (June 2015). Accounting & Finance, Vol. 55, Issue 2, pp. 467-495, 2015. Available at SSRN: https://ssrn.com/abstract=2616532 or http://dx.doi.org/10.1111/acfi.12065

Andrew B. Jackson (Contact Author)

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia

Gerry Thomas Gallery

Queensland University of Technology ( email )

School of Accountancy GPO 2434
Brisbane QLD 4001
Australia
61738648347 (Phone)

Maria Balatbat

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia

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