סמינר במימון חשבונאות

Speaker:  Paul Zarowin, NYU

This paper examines the relation between voluntary disclosure of financial statement line items accompanying, and insider trading around, quarterly earnings announcements. We find that investors’ reaction to positive earnings news is heightened by the level of financial statement line items disclosed during earnings announcements. We show that managers, being aware of investors’ attention on earnings announcements, disclose more financial statement line items along with earnings news and profit more from their insider trading at earnings announcements. These results are more pronounced for CEO/CFO trades and non-routine inside trades. Overall, our results are most consistent with managers’ strategically disclosing line items to exploit the short-term return effect to their private benefit. This paper integrates three disparate phenomena – stock returns around earnings announcements, insider trading around earnings announcements, and voluntary disclosures around earnings announcements – into pieces of one mosaic.

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