The Influence of Mandatory Disclosure Regulation on Voluntary Disclosure: Financial Reporting Timeliness and the Rise of Concurrent Earnings Announcements

Abstract

We show that the conventional disclosure strategy, in which a ‘stand-alone’ earnings announcement pre-empts the SEC-mandated filing (e.g. 10-K), has been steadily disappearing over time and is instead being replaced by a concurrent earnings announcement, in which the earnings announcement and the 10-K filing are released on the same day. We document that the prevalence of concurrent earnings announcements has increased significantly over time. Importantly for investors, we find that concurrent earnings announcements are less timely and less decision useful than stand-alone earnings announcements. Specifically, we document that concurrent earnings announcements are associated with attenuated market reactions to and greater anticipation of earnings news by investors compared to stand-alone earnings announcements. Finally, we find that firms with greater impediments to producing timely earnings information are more likely to have switched from a stand-alone to a concurrent strategy. Collectively, we document a distinct divide in the marketplace, with a growing number of firms switching to the less decision useful practice of concurrent earnings announcements, relative to stand-alone earnings announcements.