Earnings Quality and Disclosure Timing
Asian Tax Journal Vol. 15 No. 2 (2014), pp. 97-116
Abstract
This study investigates whether firms with better(worse) earnings quality make earlier(later)annual earnings announcements using sample firms listed on the Korea Exchange(KRX). Annualearnings announcements are operating performance disclosure, earnings change disclosure, or noticefor stockholders meeting, whichever comes first. Operating performance disclosures are pro－formainterim disclosures for the purpose of providing useful information to stakeholders. Earnings changedisclosures are conditionally mandatory for firms whose predicted sales or earnings change by atleast 30% from the previous fiscal year. To examine the potential association between earnings quality and earnings announcementtiming, we compare the timings of first earnings announcements made by both firms with betterearnings quality and firms with worse earnings quality. Results show that there is significantly positive relationship between discretionary accruals andearnings announcement timings. Firms with bigger discretionary accruals tend to make their firstearnings disclosures later than do firms with smaller discretionary accruals. This findings showthat earnings quality influences firms’ disclosure timings. This study has contributions in assistingstakeholder’s investment decisions and financial analyst’s forecasts.
Keywords
- earnings quality
- discretional accrual
- disclosure timing
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