Further evidence on the strategic timing of earnings news: Joint analysis of weekdays and times of day

Michaely, Roni; Rubin, Amir; Vedrashko, Alexander

doi:10.1016/j.jacceco.2016.04.002

Cited by 70 publications

(42 citation statements)

References 41 publications

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“…Overall, our results highlight the role of investor attention as a moderator in the relationship between the payment method and the acquirer announcement period and post-announcement acquirer abnormal returns. These results also contribute to the literature suggesting that corporate managers aim to exploit the limited investor attention in timing their announcements (DeHaan et al, 2015;Michaely et al, 2016).…”

Section: Resultssupporting

confidence: 67%

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The valuation effects of investor attention in stock-financed acquisitions

Adra

Barbopoulos

2018

Journal of Empirical Finance

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Limited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in their existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor attention do not experience significant announcement period wealth losses. However, the overvaluation of these acquirers is corrected in the post-announcement period. On the contrary, the overvalued acquirers that receive high investor attention and use stock as the payment method in their listed-target acquisitions experience negative announcement period abnormal returns. The widely documented evidence that stock-financed acquisitions are associated with significant announcement period wealth losses is primarily driven by deals in which the acquirers are subject to high investor attention. K eywords: investor attention, corporate takeovers, payment method, acquirer abnormal returns. JE L Classification: G34. We are grateful to comments and suggestions offered by the participants of the 14th INFINITI Conference on International Finance, Dublin, Ireland, June 2016 and the BAFA Scottish Area Group meeting, Strathclyde, UK, August 2016. The authors are also grateful for comments and suggestions offered by Faten Hammoud, Marc Morris and the participants in the seminar series of the School of Economics and Finance at the University of St. Andrews. Any remaining errors remain are ours.Investor attention affects the reaction to announced takeovers Low attention incentivizes overvalued firms to engage in stock-financed M&As These acquirers realize limited announcement period losses The overvaluation of these acquirers is only corrected in the long-run *Highlights (for review) AbstractLimited investor attention allows overvalued companies to engage in stock-financed acquisitions of listed target firms without experiencing significant reductions in their existing valuations. Our robust findings show that overvalued stock-paying acquirers that are subject to limited investor attention do not experience significant announcement period wealth losses. However, the overvaluation of these acquirers is corrected in the post-announcement period. On the contrary, the overvalued acquirers that receive high investor attention and use stock as the payment method in their listed-target acquisitions experience negative announcement period abnormal returns. The widely documented evidence that stock-financed acquisitions are associated with significant announcement period wealth losses is primarily driven by deals in which the acquirers are subject to high investor attention.

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Section: Resultssupporting

confidence: 67%

“…(2015) and Michaely et al (2016) related to the efforts of corporate managers to exploit the limited investor attention to strategically time their corporate announcements. Lastly, our findings are robust to alternative model specifications and measures of investor attention such as the Roll (1988) nonsynchronicity measure.…”

Section: Introductionmentioning

confidence: 99%

The valuation effects of investor attention in stock-financed acquisitions

Adra

Barbopoulos

2018

Journal of Empirical Finance

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“…Figure 2 illustrates the distributions of press release and street earnings activation times throughout the day. Similar to prior studies (e.g., deHaan et al, 2015;Michaely et al, 2016;Lyle et al, 2017), the majority of earnings press releases in our sample fall within two clusters: a pre-market cluster around 7-8AM and an after-market cluster at 4PM. While remaining bi-modal, the distribution of street earnings activation times is more widely dispersed, with the mass of pre-market activations trailing into regular trading hours, and the spike in activations after market close trailing later into the evening.…”

Section: Descriptive Statisticssupporting

confidence: 83%

“…Alternatively, given that firms often schedule the afterhours timing of their earnings announcements well in advance (Bagnoli et al, 2002), TR could shift its resources to times during which earnings announcements are more likely to occur. Finally, prior literature predicts that market participants are inattentive on Fridays (e.g., DellaVigna and Pollet, 2009;Michaely et al, 2016). Accordingly, we predict longer delays for Friday announcements.…”

Section: Thomson Reuters' Limited Attention and Resourcesmentioning

confidence: 58%

The Roles of Data Providers and Analysts in the Production, Dissemination, and Pricing of Street Earnings

et al. 2018

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Street earnings are non-GAAP earnings, adjusted for consistency with the analyst majority basis and disseminated by forecast data providers (FDPs). We find that the time it takes an FDP to incorporate street earnings in its products (activation delay, hereafter) reflects variation in the difficulty of constructing street earnings, investor demand for timely street earnings, and FDPs' limited attention and resources. Furthermore, the market reaction to reported earnings is more timely when activation delay is shorter, and price discovery is highly concentrated during the hour after street earnings are activated. Finally, activation delay increases the delay with which street earnings are incorporated in analyst forecasts. We conclude that frictions in information processing prevent market participants from instantaneously constructing and incorporating street earnings in their decisions, and that FDPs play a key role in alleviating these frictions.

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“…An extensive literature has highlighted that managers attempt to strategically time their earnings announcements, by announcing bad news on Friday (Penman, 1987, DellaVigna and Pollet, 2009, Michaely, Rubin and Vedrashko, 2016, after the market closes (Doyle and Magilke, 2009), by advancing their announcement relative to the initial schedule in case of good news and delaying it in case of bad news (Johnson and So, 2017), or by changing the advance notice period of the date of earnings announcements in case of bad news (Boulland and Dessaint, 2017). These studies examine independent firms.…”

Section: [Insert Figures 3a and 3b About Here]mentioning

confidence: 99%

Connected Firms and Investor Myopia

Ginglinger

Hebert

Renneboog³

2017

SSRN Journal

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Abstract. Conglomerates, multinational corporations and business groups are non-exclusive forms of complex firms. Often organized as corporate networks, complex firms control a myriad of firms connected through ownership links. We investigate whether parent-subsidiary links within corporate networks enhance transparency because the investors in a listed parent company and in its listed subsidiary now receive information about these two firms from each these firms. Alternatively, the corporate network complexity could bring about more opacity when investors are unable to detect the connections between the corporate entities. We examine the share price reactions to information releases by various entities of the corporate network. We find that parent's investors benefit from enhanced transparency in case the parent announces surprise earnings first, whereas subsidiaries' investors seem mostly unaware of ownership links and are myopic. JEL Classification: G14, G32Keywords: Ownership structures, corporate complexity, myopia surprise earnings announcements, business groups, conglomerates, inattention, post-earnings announcement drift, market frictions. * Edith Ginglinger is at Université Paris-Dauphine (Place du Maréchal de Lattre de Tassigny, 75775 PARIS Cedex 16, France) Email: edith.ginglinger@dauphine.fr; Camille Hebert is at Université Paris-Dauphine and Tilburg University Email: camille.hebert@dauphine.fr); and Luc Renneboog -the corresponding author -is at Tilburg University (POBox 90153, 5000 LE Tilburg, the Netherlands) Email: Luc.Renneboog@uvt.nl. The authors thank Paul Beaumont, Fabio Braggion, Gilles Chemla, Joost Driessen, Pascal Dumontier, Zsuzsanna Fluck, Alberto Manconi, Roni Michaely, Mario Milone, Ekatarina Neretina, Manju Puri, Emanuele Rizzo, David Robinson, Oliver Spalt, and Cara Vansteenkiste for valuable comments and helpful discussions as well as the participants to seminars at Tilburg University and Université Paris-Dauphine. The second author is grateful to Duke University for its hospitality during a research visit. The authors declare that there are not conflicts of interest. All remaining errors and omissions are our own.

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Further evidence on the strategic timing of earnings news: Joint analysis of weekdays and times of day

Cited by 70 publications

References 41 publications

The valuation effects of investor attention in stock-financed acquisitions

The valuation effects of investor attention in stock-financed acquisitions

The Roles of Data Providers and Analysts in the Production, Dissemination, and Pricing of Street Earnings

Connected Firms and Investor Myopia

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