Kauppakorkeakoulun julkaisuportaali
Aalto-yliopiston kauppakorkeakoulun gradujen tiedot nyt Aaltodocissa: Aaltodoc-julkaisuarkisto
Kauppakorkeakoulu | Rahoituksen laitos | Rahoitus | 2013
Tutkielman numero: 13595
Earnings management and strategic timing of earnings releases
Tekijä: Loisa, Jari
Otsikko: Earnings management and strategic timing of earnings releases
Vuosi: 2013  Kieli: eng
Laitos: Rahoituksen laitos
Aine: Rahoitus
Asiasanat: laskentatoimi; accounting; rahoitus; financing; tulos; return
Sivumäärä: 118
Avainsanat: exchange-listed companies; pörssiyhtiöt; rahoitus; financing; sijoittajat; investors; laskentatoimi; accounting; behavioral finance; reports; raportit; corporate governance
Objectives of the study:

The purpose of this thesis is to examine the impact of earnings management on earnings release timing decisions. The key research question is whether managers opportunistically time their announcements of upward managed earnings figures to take advantage of reduced investor attention. The existing literature focuses on the relation between earnings surprise and opportunistic earnings release timing, but the role of earnings management is not studied. This thesis aims to fill the gap by examining the impact of accruals-based earnings management and real activities manipulation on the decisions to choose less transparent reporting times, including both intraweek and intraday patterns. In addition, the impact of earnings management on reporting delay is studied. Related to non-GAAP earnings management, the thesis examines opportunistic intraweek timing of restatement announcements.

Research method and data:

Earnings announcement and financial statement data are retrieved from Thomson I/B/E/S and Compustat. In addition, control variables are retrieved from Reuters, Execucomp and Worldscope. The sample includes 150,576 quarterly earnings announcements released by U.S. listed companies during the time period from January 1995 to December 2012 with standardized earnings surprise and earnings management proxies available. Performance-matched Jones model is used to measure accruals-based earnings management, and the real activities manipulation proxies are defined according to Roychowdhury (2006). The methodology includes t-test of mean difference and a logistic regression model. In addition, OLS regression model is used to study the impact of earnings management on earnings release delay.

Findings of the study:

The results provide weak support for the relation between earnings management and opportunistic earnings release timing. Also, the study shows that earnings management increases reporting delay. In line with previous research, the results indicate that earnings surprise does not affect earnings release timing, after controlling for firm complexity and corporate governance. In addition, the higher firm complexity and better corporate governance relate to the selection of more transparent reporting times. Finally, I find that restatement announcements are more likely to appear on Fridays, compared to earnings releases.
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