Investors’ response on the deviation between quarterly and annual earnings

Fauzi Saidin, Saidatunur and Malek, Mazrah and Ibrahim, Daing Nasir and Phua, Lian Kee (2017) Investors’ response on the deviation between quarterly and annual earnings. SHS Web of Conferences, 34 (07002). pp. 1-7. ISSN 2261-2424

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Despite the benefits of timely information, concerns have been raised on the reliability of the quarterly accounts. The occurrence of deviation between audited annual accounts and cumulative quarterly accounts indicates the misstatements in the latter. This study examines investors’ response towards the occurrence of the deviation. Data is based on 792 listed companies of Bursa Malaysia in 2012. The results of the OLS regression show that the companies without earnings deviation have significantly higher earnings response coefficient than companies experiencing earnings deviation. It is also found that understated quarterly earnings companies have higher earnings response coefficient than overstated companies. Results imply that investors place higher reliability on the quarterly accounts produced by companies without earnings deviation. Higher reliability is placed on the understated quarterly earnings companies as compared to overstated companies. Findings suggest that investors do value the occurrence and types of earnings deviation. Therefore, steps should be taken to overcome the occurrence of deviation.

Item Type: Article
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28-70 Management. Industrial Management
Divisions: Pusat Pengajian Pengurusan (School of Management) > Article
Depositing User: Mr Noorazilan Noordin
Date Deposited: 10 Oct 2017 08:39
Last Modified: 10 Oct 2017 08:39

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