Alternative Title
Earnings Asymmetric Timeliness and Shareholder Distributions
Publication Type
Working Paper
Publication Date
2008
Abstract
We study whether more asymmetrically timely earnings constrain payouts to shareholders in the presence of bad news. Our goal is to provide evidence on the ex post contracting benefits of accounting conservatism. We distinguish between cash flow asymmetric timeliness and accrual asymmetric timeliness to examine how each relates to asymmetric sensitivity of shareholder payouts. We find that only the asymmetric timeliness of cash flows is significantly related to the asymmetric sensitivity of shareholder payouts. Other measures of conservatism (earnings skewness and accumulated nonoperating accruals) are also not significantly related to the sensitivity of shareholder payouts given bad news. These results suggest that accounting policies do not significantly constrain shareholder distributions conditional on news that does not affect cash flows.
Keywords
Asymmetric timeliness, shareholder distributions
Discipline
Corporate Finance
Research Areas
Finance
Citation
Frankel, Richard; Sun, Yan; and WANG, Rong.
Asymmetric Timeliness of Earnings and Shareholder Distributions. (2008).
Available at: https://ink.library.smu.edu.sg/lkcsb_research_smu/81
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
http://dx.doi.org/10.2139/ssrn.1157547