Intraday Disclosure Timing Deviations and Their Implications for Financial Reporting

Abstract

A firm makes several financial reporting and disclosure decisions in a short period of time. Seemingly unrelated decisions may be correlated because of stability in management traits or the continuation of a firm’s accounting information system. We find that firms with greater deviations from their earnings announcement intraday timing patterns during a fiscal year tend to report larger magnitudes of discretionary accruals for that year, suggesting that intraday timing deviations are negatively associated with the quality of subsequent financial reporting. This finding is attributable to either managerial opportunism or ineffective accounting information systems. Investors do not seem to immediately and fully recognize that intraday timing deviations are a telltale sign for the quality of subsequent financial reporting. In the months after the signal becomes available, firms with inconsistent intraday timing have significantly lower stock returns than firms with consistent intraday timing.

Keywords: Timing; consistency; corporate disclosure; financial reporting quality; information systems

JEL Classification: G11; G12; G14; G24