A Growing Disparity in Earnings Disclosure Mechanisms: The Rise of Concurrently Released Earnings Announcements and 10-Ks

68 Pages Posted: 29 Jun 2016 Last revised: 1 Aug 2018

See all articles by Salman Arif

Salman Arif

University of Minnesota - Twin Cities - Carlson School of Management

Nathan T. Marshall

University of Colorado at Boulder - Department of Accounting

Joseph H. Schroeder

Indiana University - Kelley School of Business - Department of Accounting

Teri Lombardi Yohn

Emory University Goizueta Business School

Multiple version iconThere are 2 versions of this paper

Date Written: June 6, 2018

Abstract

We document that the conventional disclosure practice of ‘stand-alone’ earnings announcements (EAs), which preempt 10-K filings, is steadily disappearing over time. Instead, firms are increasingly adopting the disclosure strategy of releasing the EA concurrently with the 10-K. We first examine the factors associated with firms’ adoption of concurrent EA/10-K disclosure and find that it is associated with greater impediments to producing timely and reliable earnings information, lower investor sophistication, and greater industry-level prevalence of concurrent EA/10-K reporting. We next examine the market implications of concurrent EA/10-Ks. We document that investors anticipate more of the information in concurrent EA/10-Ks, relative to stand-alone EAs, and that concurrent EA/10-Ks are more likely to be preempted by industry peer EAs. Further, the market reaction to concurrent EA/10 Ks is muted compared to stand-alone EAs even after controlling for the timing of the announcement. Our results suggest that the muted market reaction to concurrent EA/10-Ks is associated with the amount of information released, as the market reaction to concurrent EA/10-Ks is further dampened when the 10-K is longer. Concurrent EA/10 Ks are also associated with greater post-earnings-announcement drift compared to stand-alone EAs.

Keywords: Earnings Announcements; Disclosure; SEC Filings; Information Content; Timeliness; Concurrent Information

Suggested Citation

Arif, Salman and Marshall, Nathan T. and Schroeder, Joseph H. and Yohn, Teri Lombardi, A Growing Disparity in Earnings Disclosure Mechanisms: The Rise of Concurrently Released Earnings Announcements and 10-Ks (June 6, 2018). 27th Annual Conference on Financial Economics and Accounting Paper, Kelley School of Business Research Paper No. 16-50, Available at SSRN: https://ssrn.com/abstract=2801701 or http://dx.doi.org/10.2139/ssrn.2801701

Salman Arif

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://https://carlsonschool.umn.edu/faculty/salman-arif

Nathan T. Marshall (Contact Author)

University of Colorado at Boulder - Department of Accounting ( email )

419 UCB
Boulder, CO 80309-0419
United States

Joseph H. Schroeder

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Teri Lombardi Yohn

Emory University Goizueta Business School ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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