Regulating the timing of disclosure: Insights from the acceleration of 10-K filing deadlines

Audit time pressure and earnings quality: An examination of accelerated filings

“…Bryant-Kutcher et al (2013) find evidence of an increase in restatements for accelerated filers (vs. firms that did not need to file their 10-K earlier to meet the new deadlines). Doyle and Magilke (2013) focus on the overall usefulness of 10-K filings by measuring the absolute value of the three-day market reaction to the 10-K filing.…”

“…Prior research suggests firms "affected" by the accelerations (defined as requiring a reduction in filing delay as in the case of both Groups B and C) typically experienced reductions in financial reporting quality (Bryant-Kutcher et al, 2013;Doyle & Magilke, 2013). The nonsignificant coefficient on GROUP B, when the dependent variable is AbsChWCACC, suggests that earnings quality did not suffer for firms in that group.…”

“…We extend prior studies which make use of this setting (e.g., Bryant-Kutcher, Peng, & Weber, 2013;Doyle & Magilke, 2013;Impink, Lubberink, van Praag, & Veenman, 2011;Krishnan & Yang, 2009) by examining whether it is the extent of time pressure placed on the audits that is associated with lower earnings quality. We also identify conditions under which firms that were seemingly affected by the acceleration did not experience a reduction in earnings equality (i.e., firms that needed to file earlier, but did not need to reduce audit delay to do so).…”

The unintended consequences of PCAOB auditing Standard Nos. 2 and 3 on the reliability of preliminary earnings releases

“…As noted in Panel A of Table 8, 29.1% of the first disclosure of PEA revisions indicate that a subsequent event is likely to occur or has occurred between the preliminary release date and the 10-K filing date, while 19.9% of the first-time PEA disclosures are attributed to difficulties in applying new accounting guidance such as the February 7, 2005 letter from the SEC to the AICPA (SEC, 2005). Difficulties in applying new accounting guidance are more likely to be 20 Bryant-Kutcher et al (2009) find that the quality of accounting information released by accelerated filers declined, as measured by an increased incidence of financial statement restatements following this first phase-in of accelerated filing deadlines. In addition, Lambert et al (2009) show that firms that had to substantially reduce their audit lag to meet the expedited filing deadline reported poorer quality earnings as proxied by discretionary accruals, meeting or beating analyst forecasts, and accounting conservatism.…”

The Effect of the SEC’s Accelerated Filing Deadline on Earnings Timeliness

“…This suggestion is in line with other studies that document the costs of the acceleration rule. For example, Bryant-Kutcher et al (2013) document the reduced reliability of the financial reports, which is the possible cost of accelerating filing deadlines of accounting reports. Lambert et al (2014) provide support for claims made by auditors that the accelerations of 10-K filings have the capacity to reduce the quality of financial information.…”