Research Blog

A Holiday Gift for Event Traders

Those who trade off of corporate events know that when a company delays the release of their earnings it's typically because there is bad news to report.  

Joshua Livnat (Professor New York University Stern) in his paper Is There News in the Timing of Earnings Announcements found that companies that delayed their earnings release dates by at least four (4) days from a previously confirmed date, had negative returns of 177 basis points from two days after the date was changed through one day after the actual earnings announcement.  

What no one has yet studied with our data however is the significance of a date change that occurs near, or even on, a previously confirmed earnings date.  When a change occurs on a scheduled earnings date is it an even stronger signal of bad news to come?  And on top of this, if the company does not announce its earnings dates via press releases, or via its website, and therefore the knowledge of the date change is very limited, what impact will that have on the company's stock price leading up to and after the earnings get announced?

Well, we may find out next week as here is the scenario for a company I am currently watching:

December 14th, 7:12am ET -- Company IR department confirms its earnings date for 12/22 at 9:00am ET 

December 22nd, 8:33am ET -- Company IR department notifies WSH that earnings announcement will be delayed until 12/29 at 9:00am ET

So what we have here is a company deciding 27 minutes before they are scheduled to announce their earnings, delaying their earnings 7 days, to the day before New Year's Eve.

Email me directly if you would like to know the ticker for this company . . . my gift to you in celebration of the holidays!

Happy Holidays and Happy New Year to all!