Winding up of important contract 5 4 change of

This preview shows page 17 - 19 out of 19 pages.

Winding-up of important contract 5 4 Change of employees which have a key role 4 3 Lawsuit, legal proceedings (litigation) 5 4 Large-scale redundancies and social disorder 5 4 Reorganisation, rationalisation 8 6 Other events 19 14 Total 134 100 NOTES 1 We do not define timeliness in this paper in the sense of ‘conservatism’ as do e.g. Basu (1997) and Collins, Kothari, Shanken and Sloan (1994). This more recent strand of literature tends to study the delays in the ability of accounting numbers to pick up changes in net asset value. These delays occur due to the accrual accounting and the realisation principle. We study the pure disclosure delays. 2 First, it was claimed that in case of bad news, managers might exhibit a natural desire to defer repercussions from shareholders (Givoly and Palmon, 1982, p. 490). Skinner (1994, p. 39), who argues that managers face an asymmetric loss function in choosing (voluntary) disclosing policies, has already challenged this view. Second, it was suggested that managers may delay bad news disclosure if they are in a process of current negotiations and contracting procedures. As our referee pointed out, also this argument is questionable since the due-diligence process will capture most information. Third, it has been argued that time consuming creative accounting attempts occur when bad results have to be reported (Givoly and Palmon, 1982, p. 490). 3 Following Van Huffel, Joos and Ooghe (1996), we also performed the analysis excluding six firms having a non-December fiscal year end. In doing so, we found qualitatively the same results for all questions raised in this paper. The results of this robustness check can be provided on request. 4 Chambers and Penman (1984) also estimate the expected time lag as we do. They checked the robustness of their results by redefining the expected time lag with respect to the mean lag time over the seven years in their sample as well as with respect to the mean lag time for the two previous years. The various definitions of relative reporting lags lead to very similar results. 5 The ± 2 value (with 2 degrees of freedom) for extremely early and extremely late news is 3.033 having only a marginal significance of 21.95%. BELGIAN SEMI-ANNUAL EARNINGS ANNOUNCEMENTS 493 ß Blackwell Publishers Ltd 2002
Image of page 17

Subscribe to view the full document.

6 Qualitatively similar results are found based on the standard market model. This could be expected since thin trading both affects the alpha and the beta estimate, leaving the residual almost unaffected (Rendleman Jr., Jones and Latane ´, 1982; and Brown and Warner, 1985). The results based on the market model are available on request from the authors. 7 In order to test the equality of the average abnormal returns of good and bad news, we regressed AR ² ³ Dummy(good) ´ . Dummy(good) gets the value 1 in case of good news, zero in case of bad news. In this regression framework, ² measures the AAR in case of bad news and ³ measures the difference between the AAR in case of good news with respect to the constant ² . The advantage of this approach is that we can use Newey-West heteroskedasticity corrected standard errors for testing purposes.
Image of page 18
Image of page 19
  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes