The Effect of Regulation on the Timeliness and Informational Role of Earnings Announcements

This paper examines the effect of regulations (i.e., the Sarbanes-Oxley Act and Regulation G) on both the timing of earnings announcements and their relative informational role. I find that after the regulation of earnings announcements was instituted, firms began issuing less timely earnings announcements, and those announcements have become more important for shareholders. Ceteris paribus, after the regulations, firms have disclosed their fiscal year-end announcements more than four days later than they had prior to regulatory changes. My results are robust to sensitivity analyses that control for concurrent earnings announcement disclosures and other changes instituted by the Sarbanes-Oxley Act. Further, I find evidence suggesting that the relative informational role of earnings announcements has increased significantly in the post-regulation period. This study highlights a shift in both the timeliness and investor perceptions of earnings announcements spurred by the implementation of regulatory oversight, indicating a trade-off of timeliness for relevance.