SEC Filings, Regulatory Deadlines, and Capital Market Consequences (original) (raw)
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The timeliness of accounting disclosures in international security markets
International Review of Financial Analysis, 2008
In this study, we examine financial reporting lags, the incidence of late filing, and the relationship between reporting lags, firm performance and the degree of capital market scrutiny. We use a large sample of firms spanning 22 countries over a eleven-year period. A focal point of our analysis is whether the incidence of late filing, and the relations between reporting days and other variables, differ systematically between common and code law countries. Relative to U.S. firms, we report that the time taken and allowed for filing is usually longer in other countries and that the statutory requirement is more frequently violated. Timely filing is found to be less frequent in code law countries. Poor firm performance and longer reporting lags are more strongly linked in common law countries. We also find that whereas greater capital market scrutiny and more timely filing are related, there is less support for a relationship between the level of debt financing and timely filing in code law countries.
FINANCIAL REPORTING TIMELINESS: A SCOPE REVIEW OF CURRENT LITERATURE
PressAcademia Procedia, 2023
Purpose-A key factor in ensuring that stakeholders can make well-informed decisions based on accurate and up-to-date information is financial reporting timeliness. This involves the timely release of financial statements, which are essential for providing investors, creditors, and other stakeholders with an overview of a company's financial status. Timely financial reporting allows stakeholders to react quickly to changes in a company's financial situation and make informed investment decisions. It also helps to build trust and confidence in a company's management and financial reporting processes, ultimately leading to greater transparency and accountability. This study aims to provide a scope review of current literature on financial reporting timeliness by analyzing the number of publications on this topic in Web of Science. Methodology-A systematic search of academic databases and search engines was conducted using keywords such as "financial reporting timeliness," "audit report lag" and "audit report delay". Findings-We found that there are more than 150 publications on the topicality of financial reporting on the Web of Science alone from 2012-2023. Over the past few years, there has been a steady and consistent increase in the number of publications dedicated to exploring the topic of financial reporting timeliness, specifically focusing on the audit report lag. Conclusion-The review highlights key themes, including factors contributing to audit report delays, the impact of audit report delays on financial reporting timeliness, and potential solutions for improving audit report timeliness. The findings reveal that audit report delays can have significant consequences for financial reporting timeliness, and consequently, for stakeholders' decision-making processes. This scope review underscores the importance of addressing audit report delays to maintain timely financial reporting and proposes future research directions for further exploration.
Conservatism, Optimal Disclosure Policy, and the Timeliness of Financial Reports
The Accounting Review, 2001
We develop a theory of the relation between biases in financial reporting and managers' incentives to issue timely voluntary disclosures. We find that firms with relatively more conservative accounting are less likely to make timely voluntary disclosures than firms with less conservative accounting. Therefore, price is more timely in reflecting the news of firms with less conservative accounting. Prior research has assumed that the timeliness by which news is impounded in price is uncorrelated with the nature of accounting earnings and has ascribed a concave earnings-return relation to the accounting system reporting bad news on a more timely basis than good news. In our theory, a concave relation is not necessarily attributable to a difference in the way the accounting system reports good vs. bad news. Rather, our prediction stems from how biases in mandatory financial reports determine which firms optimally choose to make voluntary preemptive disclosures and which do not. Henc...
SEC rules 33-8128 and 33-8644 substantially reduce the 10-K filing period for large accelerated filers and accelerated filers from 90 days after fiscal year-end to 60 and 75 days, respectively. Large accelerated filers are firms with a market value of equity greater than 700M,andacceleratedfilershaveamarketvalueofequitybetween700M, and accelerated filers have a market value of equity between 700M,andacceleratedfilershaveamarketvalueofequitybetween75M and $700M. The SEC has twice reduced filing deadlines by 15 days. For many firms and their auditors, these rules have led to mandatory reductions in audit delay (i.e., the length of time from a company"s fiscal year-end to the date of the auditor"s report). We investigate the effects of this regulation by examining under what contexts these mandatory reductions have been associated with lower earnings quality. We use both discretionary accruals and meeting or just beating the consensus analyst forecast to proxy for earnings quality. We find that larger mandatory reductions in audit delay (≥ 15 days) negatively impact earnings quality. This result suggests an unintended consequence of the SEC"s two separate 15-day reductions in filing deadlines (i.e., lower earnings quality). The aforementioned relation between audit delay reductions and earnings quality also appears to be attributable to smaller accelerated filers (vs. large accelerated filers). We provide initial evidence that caution should be taken before considering a further reduction for accelerated filers (e.g., from 75 to 60 days) or expanding accelerations to even smaller non-accelerated filers (who currently still face a 90-day filing deadline). Moreover, our empirical evidence should inform non-U.S. regulatory bodies considering filing deadline accelerations in the future. Overall, our findings support claims by auditors and preparers that accelerated filings have the capacity to reduce the quality of financial information supplied to external users.
The economic consequences of (not) issuing preliminary earnings announcement
2005
While 80% of companies consistently issue preliminary earnings announcements to the market through a press release prior to their SEC filings (Prelims), 8% consistently file 10Q/Ks without first issuing a preliminary earnings press release (Filers). The remaining 12% use a mixed strategy. Prior studies of market reactions to earnings typically ignore firms that do not issue preliminary earnings releases, leading to a potential bias in studies of both the market reactions to the initial earnings releases or the post-earnings announcement drift. The purpose of this study is to assess this bias through an examination of the characteristics of Filers. The study further investigates whether market reactions to SEC filings of Filers are different systematically from those to preliminary earnings releases of Prelims, and whether the drift in returns subsequent to the earnings release also differs across the two groups. We find that Filers are smaller than Prelims, are more likely to report losses, have lower earnings persistence, and also lower correlation between earnings and operating cash flows. In addition, Filers are "neglected" companies relative to Prelims, as reflected by their lower trading volume, lower likelihood of raising new capital and lower analysts' coverage. Consequently, results obtained by prior research on market reactions to preliminary earnings announcements may be biased in excluding small, "neglected", firms from the analysis. We also find that Filers have significant market reactions to earnings around the SEC filings, when this information is initially available to investors. However, this reaction is weaker than that of properly matched Prelims around the preliminary earnings announcement date. This result supports the claim that preliminary earnings announcements receive more attention from investors than SEC filings, and also that providing a full set of information (rather than the condensed preliminary earnings information) may reduce the influence of earnings on prices. Furthermore, we find that Filers have smaller post-earnings announcement drifts than properly matched Prelims, although the difference in drifts is not statistically significant at the 0.10 level. This result suggests that providing a more complete set of information, which enables investors to better assess the quality of earnings immediately, may reduce the drift but the reduction is rather small and cannot fully explain away investors' underreaction to earnings surprises. Finally, we find that while the accrual anomaly exists in Prelims, this anomaly does not exist in Filers, primarily because accruals are disclosed together with earnings in the case of Filers.
SSRN Electronic Journal, 2000
SEC rules 33-8128 and 33-8644 substantially reduce the 10-K filing period for large accelerated filers and accelerated filers from 90 days after fiscal year-end to 60 and 75 days, respectively. Large accelerated filers are firms with a market value of equity greater than 700M,andacceleratedfilershaveamarketvalueofequitybetween700M, and accelerated filers have a market value of equity between 700M,andacceleratedfilershaveamarketvalueofequitybetween75M and $700M. The SEC has twice reduced filing deadlines by 15 days. For many firms and their auditors, these rules have led to mandatory reductions in audit delay (i.e., the length of time from a company"s fiscal year-end to the date of the auditor"s report). We investigate the effects of this regulation by examining under what contexts these mandatory reductions have been associated with lower earnings quality. We use both discretionary accruals and meeting or just beating the consensus analyst forecast to proxy for earnings quality. We find that larger mandatory reductions in audit delay (≥ 15 days) negatively impact earnings quality. This result suggests an unintended consequence of the SEC"s two separate 15-day reductions in filing deadlines (i.e., lower earnings quality). The aforementioned relation between audit delay reductions and earnings quality also appears to be attributable to smaller accelerated filers (vs. large accelerated filers). We provide initial evidence that caution should be taken before considering a further reduction for accelerated filers (e.g., from 75 to 60 days) or expanding accelerations to even smaller non-accelerated filers (who currently still face a 90-day filing deadline). Moreover, our empirical evidence should inform non-U.S. regulatory bodies considering filing deadline accelerations in the future. Overall, our findings support claims by auditors and preparers that accelerated filings have the capacity to reduce the quality of financial information supplied to external users.
Extensions and violations of the statutory SEC form 10-K filing requirements
Journal of Accounting & Economics, 1994
We present evidence that 20 percent of the IO-KS in our sample are filed with the SEC after the 90-day statutory due date. Firms that delay filing their 10-K are not a random sample of firms; up to 25 (10) percent of the firms experiencing unfavorable (favorable) economic events delay their IO-K. Firms that delay their IO-K are, on average, small, have negative accounting rates of return, negative earnings changes, low liquidity, and high financial leverage; they also experience negative marketadjusted stock returns.
The effect of fair disclosure regulation on timeliness and informativeness of earnings announcements
Interim information Timeliness of information Korea reports after external audits are completed, thereby potentially invalidating the effectiveness of the regulation. In addition, we find that preliminary financial reports have information value only if they are disclosed prior to annual audit report dates. This finding supports the notion that timeliness increases the informativeness of preliminary financial report disclosure by curbing insiders' ability to potentially profit from their information advantage.