Do firms time the release of news in response to investor inattention? We consider news about earnings and analyze the reaction of investors to announcements on Friday and on other weekdays. The announcements have two main effects on stock returns. First, the short-term response to Friday earnings announcements is 20 percent smaller than the response on other days of the week. Second, the post-...

This study consists introductory survey and three essays where investors’ trading responses to interim earnings announcements are studied using Finnish data. The essays are individual papers, but their topics are closely connected since they address the trading response from different angles. The essays progress from an aggregated to a more detailed examination. The first essay was conducted on...

Stock-based compensation puts managers in the position of having, at some point, to sell stock. The prevalence of stock-based compensation in the 1990s allegedly created incentives for managers to hype their companies’ stock price by manipulating earnings before selling stock. Consistent with this conjecture, we find that managers tended to inflate earnings prior to selling stock. Moreover, the...

the study objects for investigating the possibility of activating both audit committee and board of directors for restricting the practices of earnings management phenomenon. to achieve this objective, a questionnaire had been developed and self-administered for a selected sample consists of 123 auditors working in jordan based on the simple random sampling method. the study first hypothesis is...

This paper examines whether the “soft” information contained in the text of management’s quarterly earnings press releases is incrementally informative over the company’s reported “hard” earnings news. We use Diction, a textual-analysis program, to extract various dimensions of managerial net optimism from more than 20,000 corporate earnings announcements over the period 1998 to 2006 and docume...

Not all stock recommendation changes are equal. In a sample constructed to minimize the impact of confounding news, relatively few analyst recommendation changes are influential in the sense that they impact investors’ beliefs about a firm in a way that could be noticed in that firm’s stock returns. More than one-third of the stock-price reactions to analyst recommendation changes have the wron...

We examine whether the provision of non-audit services by auditors is negatively correlated with firm value and the quality of earnings. Because of concerns regarding the effect of non-audit services on auditor independence, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees pai...

SYNOPSIS: This study examines whether financial analysts and institutional investors play a disciplinary role in monitoring corporate financial reporting and disclosure. Using a sample of firms that meet or marginally beat analysts’ forecasts, likely through upward earnings management and downward expectations management, this study shows that managers’ use of the two tactics is associated with...

In this study, we measure managerial affective states during earnings conference calls by analyzing conference call audio files using vocal emotion analysis software. We hypothesize and find that negative affect displayed by managers discussing their firms’ results and prospects is informative about the firm’s financial future. In particular, we find that managers exhibiting negative affect are...

This paper hypothesizes that earnings management in China’s listed companies is mainly induced by controlling owners’ tunneling activity. We conduct our analyses in two stages. In the first stage, we relate our analyses to prior research on Chinese listed companies which has documented their strong incentives to manage earnings in order to meet certain return on equity (ROE) thresholds. We iden...