Information in Mandatory and Voluntary Earnings Announcement Date Forecasts

Information in Mandatory and Voluntary Earnings Announcement Date Forecasts

By Mary E. Barth, Greg Clinch, Paul Ma
April 22,2018Working Paper No. 3661

We address whether mandatory forecasts of earnings announcement dates are informative and what are the informational tradeoffs between mandatory and voluntary forecasts. We find China mandatory forecasts predict actual earnings announcement dates and yet-to-be-announced firm performance, and the market reacts to the initial and revised forecasts accordingly. Regarding informational tradeoffs we find the following. China mandatory forecasts are informative, even by firms less likely to issue a voluntary forecast; this information is unavailable in a voluntary regime. The act of US voluntary forecasting and its timing reveal information incremental to the forecasted announcement date, which is unavailable in a mandatory regime. Perhaps surprisingly, US voluntary and China mandatory initial forecasts convey a similar amount of earnings news, which is noteworthy because the China forecasts are issued substantially earlier and suggests the amount of information in the act and timing of voluntary forecasts is small.

Keywords
forecasts of earnings announcement dates, mandatory forecasting, private information precision, Voluntary Disclosure, informational tradeoffs, information timeliness