The Effect of Delayed Quarterly Earnings Announcements on Abnormal Returns by Considering the Moderating Role of Earnings Manipulation

The results of the previous literature in the field of return and earnings indicate the negative effect of delayed earnings announcement on abnormal stock returns, that this negative reaction can be result from the existence of earnings manipulation in the announcement of delayed earnings. Due to the importance of earnings and return relationship, the purpose of this research is to investigate the effect of quarterly earnings announcement delay on abnormal returns in the earnings announcement window and also to investigate the moderating role of earnings manipulation on this relationship. For this purpose, a sample containing quarterly data of 126 companies listed to the Tehran Stock Exchange in the period 1391 to 1400 has been selected.Regression analysis was used to test the hypotheses. The result of the first hypothesis test showed that the delay of quarterly earnings announcement has a negative and significant effect on the abnormal return. Also, according to the second hypothesis, earnings manipulation based on the adjusted model of Beneish (1999) aggravates this negative effect. That is, the delayed earnings announcement in the Investors' view can involve earnings manipulation and as a result, the negative reaction to the delay in quarterly earnings announcements will intensify. However, earnings manipulation based on the model of Kothari et al. (2005) did not have a significant effect on the negative market reaction to the delayed earnings announcement.