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Around-the-Clock Media Coverage and the Timing of Earnings Announcements

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Author Info
Bagnoli, Mark
Clement, Michael
Watts, Susan G.
Abstract

We reexamine the descriptive ability of the conventional wisdom that earnings announcements made after trading and on Friday are dominated by bad news in light of the 24/7 media coverage and other technological changes of the 1990’s. We find that the change in media coverage has facilitated a significant change in earnings announcement times: only 27% of earnings announcements are now made during trading as opposed to 67% in prior research. However, our finding of continued dominance of bad news in Friday announcements in particular strongly suggests that the conventional wisdom is not solely the result of managers’ desire to take advantage of limited media coverage. Instead, managers appear to be taking advantage of other aspects of investors’ behavior, such as their anticipating negative Friday announcements earlier in the week, and the relatively quiet (in terms of trading) weekend period to manage stock price responses to their companies’ financial news.

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File URL: http://www.krannert.purdue.edu/programs/phd/Working-paper-series/Year-2005/1184.pdf
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Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1184.

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Length: 37 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:pur:prukra:1184

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Related research
Keywords: strategic planning ; bad news ; earnings announcements ; earnings disclosures;

Find related papers by JEL classification:
G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting

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  1. Hirshleifer, David & Lim, Sonya Seongyeon & Teoh, Siew Hong, 2006. "Driven to distraction: Extraneous events and underreaction to earnings news," MPRA Paper 3110, University Library of Munich, Germany, revised 16 Apr 2007. [Downloadable!]
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This page was last updated on 2009-11-28.

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