An Empirical Investigation of Pre-Earnings Announcement Quiet Periods
31 Pages Posted: 19 Apr 2002
Date Written: February 2002
Abstract
Previous research suggests legal liability as a strong determinant of corporate disclosure policies and the content of corporate disclosures. We study the influence of pre-earnings announcement quiet periods on legal liability and the affect of Regulation FD on corporation's use of quiet periods. The we provide evidence on three questions: First, we test whether quiet periods have become more prominent following the implementation of regulation FD. Second, we compare the characteristics of quiet period firms to firms making earnings forecasts after the fiscal-period-end. Third, we investigate how trading volume at and before earnings announcement dates differs between companies with quiet periods and companies making earnings forecasts after the fiscal-period-end. The purpose of these tests is to better understand the effect of legal liability on non-disclosure policies. We find a substantial increase in the number of reported quiet periods after implementation of FD requirements. We also find that quiet period firms have characteristics associated with higher litigation risk. Finally, we find that volume is significantly higher before and significantly lower at earnings announcement dates associated with quiet periods.
JEL Classification: K22, M41, M45
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Role of Supplementary Statements with Management Earnings Forecasts
By Amy P. Hutton, Gregory S. Miller, ...
-
Do Managers Withhold Bad News?
By S.p. Kothari, Susan Shu, ...
-
By Marilyn F. Johnson, Ron Kasznik, ...
-
Does Disclosure Deter or Trigger Litigation?
By Laura Casares Field, Michelle Lowry, ...
-
Shareholder Wealth Effects of the Private Securities Litigation Reform Act of 1995
By Marilyn F. Johnson, Ron Kasznik, ...
-
Do Conference Calls Affect Analysts' Forecasts?
By Robert M. Bowen, Angela K. Davis, ...
-
The Financial Reporting Environment: Review of the Recent Literature
By Anne Beyer, Daniel A. Cohen, ...
-
Management Earnings Forecasts: A Review and Framework
By D. Eric Hirst, Lisa Koonce, ...