Ed deHaan, Stanford University
Terry Shevlin, University of California at Irvine
Jacob Thornock, University of Washington
Wall Street Horizon Abstract
Do managers attempt to hide bad news by announcing earnings during periods of low market attention? The authors believe so. Unfortunately, managers do not always know the best time to report. Thinking there is less attention on Fridays, managers report more bad news on Fridays than expected. The data shows that there is the same investor attention on a Friday as any other weekday.
Ed deHaan proves that there is lower attention after market hours than either before or during market hours. In addition, market attention is lower on busy reporting days, as well as when earning announcements are scheduled with less lead-time. Consistent with the theory that managers try to hide bad news, earnings announcements released during these periods tend to be worse.
While managers may change their earnings announcement date often for legitimate reasons, the authors believe that managers periodically revise their announcement date for strategic purposes, such as to hide bad news, or bring attention to good news. In any given year, nearly 82% of firms change their quarterly earnings announcement weekday at least once.
Investors beware! Managers may try to limit attention to negative news by strategically announcing earnings either after hours, during busy reporting days, or with less lead-time. But not on Fridays!
Horizon Views Blog Post
Are you an academic interested in Wall Street Horizon data? Please contact us.Note: While the academics listed made extensive use of Wall Street Horizon corporate events data, please note Wall Street Horizon does not sponsor academic research; all papers are conducted independently by the researchers and their teams at their respective organizations.