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
Abstract
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.
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