Asymmetric Timeliness and the Resolution of Investor Disagreement and Uncertainty at Earnings Announcements

This study finds that greater asymmetric timeliness of earnings is associated with slower resolution of investor disagreement and uncertainty at earnings announcements. These findings indicate that a potential cost of asymmetric timeliness is that it requires equity holders to disaggregate the earnings surprise into good and bad news components to assess the valuation implications of earnings. Such a disaggregation impedes the speed with which investor disagreement and uncertainty resolve. We also find a positive relation between asymmetric timeliness and stock returns during the earnings announcement period after the initial price reaction to the announcement, which is consistent with resolution of valuation uncertainty. In addition, we find more net stock purchases during this period by insiders of firms with greater asymmetric timeliness, which is consistent with insiders not bearing such valuation uncertainty.