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Earnings management by firms announcing earnings after SEC filing

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  • Kwang-Hyun Chung
  • Rudolph Jacob
  • Ya Tang

Abstract

This study examines motivation and stock market reactions of firms announcing earnings in the Wall Street Journal (WSJ) after filing with the Security Exchange Commission (SEC). Most firms announce earnings in the WSJ before SEC filing. Firms that reverse this sequence are voluntarily delaying public earnings announcements. The authors find that these firms are not only poor financial performers but also engage in earnings managements. They are delaying their WSJ announcements to postpone announcing bad news. The authors find significant stock price reactions to both the SEC filing and the WSJ announcement. The price reaction to earnings is incomplete at the SEC filings. The market continues reacting to firms' subsequent WSJ announcements as if the SEC filing fails to communicate earnings information to some investors. Copyright International Atlantic Economic Society 2003

Suggested Citation

  • Kwang-Hyun Chung & Rudolph Jacob & Ya Tang, 2003. "Earnings management by firms announcing earnings after SEC filing," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(2), pages 152-162, May.
    • Handle: RePEc:kap:iaecre:v:9:y:2003:i:2:p:152-162:10.1007/bf02295716
    DOI: 10.1007/BF02295716
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    References listed on IDEAS

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    1. Jones, Jj, 1991. "Earnings Management During Import Relief Investigations," Journal of Accounting Research, Wiley Blackwell, vol. 29(2), pages 193-228.
    2. Chambers, Ae & Penman, Sh, 1984. "Timeliness Of Reporting And The Stock-Price Reaction To Earnings Announcements," Journal of Accounting Research, Wiley Blackwell, vol. 22(1), pages 21-47.
    3. Kross, W & Schroeder, Da, 1984. "An Empirical-Investigation Of The Effect Of Quarterly Earnings Announcement Timing On Stock Returns," Journal of Accounting Research, Wiley Blackwell, vol. 22(1), pages 153-176.
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