Does Financial Reporting Frequency Affect Investors’ Reliance on Alternative Sources of Information? Evidence from Earnings Information Spillovers Around the World

53 Pages Posted: 18 Jan 2017 Last revised: 6 Feb 2018

See all articles by Salman Arif

Salman Arif

Indiana University - Kelley School of Business - Department of Accounting

Emmanuel T. De George

London Business School - Department of Accounting

Date Written: January 1, 2018

Abstract

This paper investigates whether financial reporting frequency affects investors’ reliance on alternative sources of earnings information. We find that the returns of semi-annual earnings announcers are almost twice as sensitive to the earnings announcement returns of US industry bellwethers for non-reporting periods compared to reporting periods. Strikingly, these heightened spillovers are followed by return reversals when investors finally observe own-firm earnings at the subsequent semi-annual earnings announcement. This indicates that investors periodically overreact to peer-firm earnings news in the absence of own-firm earnings disclosures arising from low reporting frequency. Collectively, this study sheds light on how reporting frequency affects investors’ reliance on alternative sources of earnings information and the transmission of earnings news around the world.

Keywords: Financial Reporting Frequency, Information Spillovers, Bellwether Earnings News

JEL Classification: M41, M48, G14

Suggested Citation

Arif, Salman and De George, Emmanuel T., Does Financial Reporting Frequency Affect Investors’ Reliance on Alternative Sources of Information? Evidence from Earnings Information Spillovers Around the World (January 1, 2018). Kelley School of Business Research Paper No. 17-7. Available at SSRN: https://ssrn.com/abstract=2900988 or http://dx.doi.org/10.2139/ssrn.2900988

Salman Arif

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

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

Emmanuel T. De George (Contact Author)

London Business School - Department of Accounting ( email )

Regent's Park
London, NW1 4SA
United Kingdom
+44 (0)20 7000 8118 (Phone)
+44 (0)20 7000 7001 (Fax)

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