Are Delayed Earnings Announcements Informative for Peer Firms?

ABSTRACT A large literature in accounting and finance has examined the effect of earnings announcements on a firm's own stock price, the effect of delays in announcements, and the effect of a firm's earnings announcements on peer firms as mutually exclusive events. However, it is an open question how these latter two effects interact, that is, whether delayed earnings announcements influence the stock price of peer firms. Hence, this article examines the effect of delayed earnings announcements on the magnitude of information transferred to peer firms. We find that a delay in earnings announcement, conditional on it remaining one of the first announcements in the industry, attenuates the information transfer to peer firms by 24%. The attenuation is robust to several alternative model specifications, clustering, fixed effects, and alternative measures of expected earnings announcement dates. Our tests are consistent with overreaction by peer firms and hence inconsistent with investor inattention. Furthermore, our evidence suggests that the attenuation is not entirely attributable to poor‐quality earnings that are typically associated with delayed announcements. However, we do find that information leakage during the delay period and less industry‐relevant information in delayed announcements are potential explanations for the attenuation in information transfer.