The Delay of Earnings Announcement and Earnings Management

In this research the effect of "bad news" variable on "operating profit" and "earnings management" variables have been examined. Recognition of probability relationship between delay of earnings announcement with rank of earnings management exercise and operating profit would considered useful because of recognition of factors which effect timeliness of accounting reports. In this direction two following hypothesizes were tested: Hypothesis1: Firms that delay their announcement earnings would have bad news about earnings. Hypothesis2: Firms that delay their announcement earnings will deal with earnings management to increase earnings. To test mentioned hypothesizes the sample consist of 93 firm s related to 8 industries was chosen. This sample was chosen among accepted companies in securities exchange and was tested in the seven years time period (2001 to 2008). To test hypothesis1 the delay of earnings announcement and earnings changes was examined in the different years, the firms which placed in the first quarter were determined as firms which announce their earningtimely and the firms which placed in the third quarter were determined as firms which announce their earnings with delay. By using statistical methods and liner regression of net profit and time period of delay in earnings announcement it could be said with 95% confidence: "Firms that delay their announcement earnings would have bad news about earnings". To test hypothesis2 it could be decided by examination of delay in announce of earnings and discretionary accruals in different years. To estimate the earnings management Jones adjusted model was used; by using statistical methods and liner regression of discretionary accruals and time period of delay in announce of earnings it could be said with 95% confidence:: Firms that delay their announcement earnings will deal with earnings management to increase earnings.