Research On The Timing Of Listed Companies’ Earnings Report Announcement Based On Limited Investor Attention

Financial market risk and the authenticity of accounting information have drawn a lot of attention by countries, due to the corporate governance scandals at the beginning of the century and the recent sub-prime crisis. As a result, listed firms’information disclosure is paid enough importance by the regulators. Indeed, as the implementation of a series of information disclosure laws and rules, the content and form of the information has been more and more uniform day by day. However, it is quite usual that the insiders of the firms take kinds of strategies to distract investors’information acquisition. It is important to study how the insides strategically disclose information. This paper takes the investor limited attention as the starting point, study listed firm’s earnings report announcement behavior based on the motivation of attention management.This paper first models the investor attention into firms’information disclosure process and analyzes the information disclosure equilibrium, I find that as the investor attention level affects information efficiency, short horizon managers will take investor attention into account when they disclose information.This paper then empirically studies how investor attention may affect information efficiency through Chinese listed companies’annual report data. I identify three types of date when investors’attention is low, the days that a great number of firms release report, annual financial reports release overlapping with first quarterly financial reports and release on Saturday. The empirical results show that the firms’news around announcement day is low in low investor attention days, the abnormal trading volume and market reaction also have significant low level, which indicates that the firm disclose in low attention days can reduce the information efficiency.Since low investor attention can reduce information efficiency, I then examine is there information disclosure timing in listed companies based on investor attention management. The results show that compare with good performance firms, poor ones would like to disclose on the three types of low-attention date, while the poor performance firms propone to disclose more on days overlap with the first quarterly reports, then on the days that large number of firms release report, and on Saturday. Further analysis show that when the firm performance is negative, short horizon managers prefer to disclose in low attention days more.At last, this paper studies what kinds of the corporate governance mechanism can prove the manager from information disclosure timing behavior. I find that board of directors as well as shareholders can not supervise the manager, while the stock incentive to the manager can reduce the opportunistic behavior in information disclosure, which indicates that the directors and the shareholders did not realize manager’s disclosure timing behavior.