Post by Duke University - The Fuqua School of Business

With earnings announcements, “delay usually means bad news.” But new research from Prof Xu Jiang shows that some companies intentionally delay earnings announcements so they can release them after Federal Reserve meetings—allowing analysts and investors to incorporate the Fed’s latest signals about the economy into their forecasts. Key insights: • Firms are more likely to postpone earnings announcements until shortly after FOMC meetings. • Analysts also tend to wait for Fed announcements before revising forecasts. • After Fed meetings—especially those with unexpected news—analyst forecasts become more accurate and informative. • Better forecasts improve stock liquidity by reducing bid-ask spreads. • Firms also appear to make more efficient investment decisions when market prices better reflect fundamentals. • The findings challenge the assumption that delayed earnings announcements always signal bad news. “Our finding is that, for firms that delay announcements close to FOMC meetings, investors should not assume they are hiding bad news,” Jiang said. “In many cases, they’re trying to make better decisions by helping analysts make better predictions.” #Finance #FederalReserve #FOMC #CapitalMarkets #InvestorRelations #FinancialMarkets #CorporateFinance #Accounting