What can we learn from firm-level jump-induced tail risk around earnings announcements?

Purpose The purpose of this study is to investigate how family ownership affects the disclosure tone of firm earnings press releases. Design/methodology/approach Following prior literature, this study defines family firms as those in which members of the founding families continue to hold positions in top management, to sit on the board or to be blockholders. The disclosure tone of earnings press releases is measured by the level of optimism in firms’ earnings announcements using Loughran and McDonald’s (2011) word classifications. Multivariate analysis is performed to examine the impact of family ownership on firms’ disclosure tone. Additional analysis includes controlling for different firm-level characteristics and using alternative measures of disclosure tone. Findings This study documents that the disclosure tone of earnings announcements is more optimistic for family firms than for non-family firms. The result implies that family owners’ large undiversified equity position in their business results in strong incentives for them to issue more positive earnings announcements to maintain high stock performance. Further analysis reveals that the results are mainly driven by family firms with founder CEOs. The results are robust to controls for corporate governance characteristics and to alternative measures of corporate disclosure tone. Originality/value The findings of this study contribute to the literature that examines factors associated with the determinants of the tone in firms’ earnings announcements. In addition, this study adds to the extant literature on family firms by providing useful insight into the influence of family control on corporate voluntary disclosure.

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The Timing of Earnings Announcements: An Examination of the Strategic Disclosure Hypothesis

The Accounting Review ◽

10.2308/accr.2009.84.1.157 ◽

2009 ◽

Vol 84 (1) ◽

pp. 157-182 ◽

Cited By ~ 79

Author(s):

Jeffrey T. Doyle ◽

Matthew J. Magilke

Keyword(s):

Earnings Announcements ◽

Dissemination Strategy ◽

Firm Level ◽

Explanatory Variables ◽

Strategic Disclosure ◽

News Release ◽

New Information ◽

Timing Decision ◽

Abnormal Volume ◽

Industry Membership

ABSTRACT: Beginning with Patell and Wolfson (1982), several papers have documented that earnings announcements made after the market closes and/or on Fridays tend to contain worse earnings news than those made at other times. One hypothesis is that opportunistic managers release earnings at these times of decreased media attention to “hide” their bad news and reduce the associated market penalty. Using firm-level tests that focus on only those firms that switch their disclosure timing (rather than consistently report at the same time), we find no evidence that managers opportunistically report worse news after the market closes or on Fridays. We then explore other determinants of the timing decision, including the more benign hypothesis that managers with worse earnings news release earnings after the market closes to more broadly disseminate the information. Consistent with desiring more time for the market to assimilate the announcement, we find some evidence that more complex firms tend to announce earnings after the market closes. We also find that these announcements are associated with greater abnormal volume, possibly indicating a successful dissemination strategy. We also find that the corporate headquarters location, the size of the firm, the number of analysts covering the firm, and industry membership are all significant explanatory variables for the timing decision. Overall, our findings are consistent with efficient capital markets that are effective at monitoring new information, regardless of the time of the announcement.

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Visuals and attention to earnings news on twitter

Review of Accounting Studies ◽

10.1007/s11142-021-09630-8 ◽

2021 ◽

Author(s):

Alexander Nekrasov ◽

Siew Hong Teoh ◽

Shijia Wu

Keyword(s):

Earnings Announcements ◽

User Engagement ◽

Investor Attention ◽

Firm Level ◽

Managerial Opportunism ◽

Earnings Response Coefficient ◽

Response Coefficient ◽

Initial Return ◽

Earnings Response ◽

Attention Hypothesis

AbstractWe propose the visual attention hypothesis that visuals in firm earnings announcements increase attention to the earnings news. We find that visuals in firms’ Twitter earnings announcements are associated with more retweets, consistent with greater user engagement with announcements that have visuals. This result holds for earnings tweets sent by the same firm and on the same day in firm-level and tweet-level analyses. Consistent with managerial opportunism, firms are more likely to use visuals in their earnings tweets when performance is good but less persistent. Consistent with visuals increasin g investor attention, the initial return response to earnings news is stronger and the post-announcement response is lower when visuals are used. Our evidence of a post-announcement return reversal indicates that visuals can be a double-edged sword. Furthermore, the higher earnings response coefficient from visuals is more pronounced on days with high investor distraction (when many other firms are also announcing earnings). Graphical abstract

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Tail Risk Transmission: A Study of the Iran Food Industry

Risks ◽

10.3390/risks8030078 ◽

2020 ◽

Vol 8 (3) ◽

pp. 78

Author(s):

Fatemeh Mojtahedi ◽

Seyed Mojtaba Mojaverian ◽

Daniel F. Ahelegbey ◽

Paolo Giudici

Keyword(s):

Food Industry ◽

Stock Exchange ◽

Downside Risk ◽

Financial Assets ◽

Market Conditions ◽

Firm Level ◽

Tail Risk ◽

Empirical Application ◽

Equity Risk ◽

Turbulent Times

This paper extends the extreme downside correlation (EDC) and extreme downside hedge (EDH) methodology to model the interdependence in the sensitivity of assets to the downside risk of other financial assets under severe firm-level and market conditions. The model is applied to analyze both systematic and systemic exposures in the Iranian Food Industry. The empirical application investigates (1) which company is the safest for investors to diversify their investment, and (2) which companies are the “transmitters” and “receivers” of downside risk. We study the return series of 11 companies and the Food Industry index publicly listed on the Tehran Stock Exchange. The data covers daily close prices from 2015–2020. The result shows that Mahram Manufacturing is the safest to hedge equity risk, and Glucosan and Behshahr Industries are the riskiest, while Gorji Biscuit is central to risk transmission, and Pegah Fars Diary is the main “receiver” of risk in turbulent times.

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Information Ambiguity, Jump Tail Risk and Stock Price Reactions to Earnings Announcements

10.14264/uql.2019.459 ◽

2019 ◽

Author(s):

Mengxi Liu

Keyword(s):

Stock Price ◽

Earnings Announcements ◽

Tail Risk ◽

Price Reactions ◽

Stock Price Reactions ◽

Information Ambiguity

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Asset Pricing With Endogenously Uninsurable Tail Risk

Econometrica ◽

10.3982/ecta15142 ◽

2021 ◽

Vol 89 (3) ◽

pp. 1471-1505

Author(s):

Hengjie Ai ◽

Anmol Bhandari

Keyword(s):

Asset Pricing ◽

Risk Sharing ◽

Risk Premia ◽

Firm Level ◽

Tail Risk ◽

Labor Earnings ◽

Labor Market Dynamics ◽

Retention Effort ◽

Optimal Risk Sharing

This paper studies asset pricing and labor market dynamics when idiosyncratic risk to human capital is not fully insurable. Firms use long‐term contracts to provide insurance to workers, but neither side can fully commit; furthermore, owing to costly and unobservable retention effort, worker‐firm relationships have endogenous durations. Uninsured tail risk in labor earnings arises as a part of an optimal risk‐sharing scheme. In equilibrium, exposure to the tail risk generates higher aggregate risk premia and higher return volatility. Consistent with data, firm‐level labor share predicts both future returns and pass‐throughs of firm‐level shocks to labor compensation.

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Marshallian Cross: An Alternative Justification and Related Issues

Voprosy Ekonomiki ◽

10.32609/0042-8736-2013-2-108-120 ◽

2013 ◽

pp. 108-120 ◽

Cited By ~ 1

Author(s):

L. Grebnev

Keyword(s):

Alternative Treatment ◽

Supply And Demand ◽

Firm Level ◽

Economics Courses ◽

Introductory Economics

The paper provides a justification of the laws of supply and demand using the concept of a marginal firm (technology) for the case of perfect competition.The ideological factor of excessive attention to the analysis of marginal parameters at the firm level in the introductory economics courses is discussed. The author connects these issues to the ideas of J. B. Clark and gives an alternative treatment of exploitation.

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