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The author is Associate Professor at the School of Business Administration, University of Vermont. This paper has benefitted from comments made by Larry Brown, Ronald Dye, Kevin Geraghty, Paul Healy, Herb Hunt and the anonymous referee.
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INTERIM EARNINGS MANAGEMENT AND THE FOURTH QUARTER GOOD NEWS EFFECT
Article first published online: 7 DEC 2006
DOI: 10.1111/j.1468-5957.1994.tb00354.x
Additional Information
How to Cite
Dempsey, S. J. (1994), INTERIM EARNINGS MANAGEMENT AND THE FOURTH QUARTER GOOD NEWS EFFECT. Journal of Business Finance & Accounting, 21: 889–908. doi: 10.1111/j.1468-5957.1994.tb00354.x
Publication History
- Issue published online: 7 DEC 2006
- Article first published online: 7 DEC 2006
- (Paper received July 1992, revised and accepted November 1992)
- Abstract
- References
- Cited By
This paper presents evidence of a larger return reaction (variance) to fourth quarter announcements that induce contemporaneously positive returns. The results are consistent with: (i) audited annual announcements being marginally more informative for reports that corroborate previously unaudited interim good news claims, and (ii) the level of marginal informativeness being a decreasing function of interim auditor involvement (proxied by firm size). The good news effect is robust over time, and sensitivity analyses fail to support competing explanations for the effect attributable to report timing differences or comparatively noisy fourth quarter bad news reports.