Timeliness of Annual Reports, Management Disclosure and Information Transparency -Evidence From China

Abstract

This paper examines the determinants, the current signal effect and the long-term one from the timeliness of the annual report with the proxy of the short term signal effect and the information transparency next period respectively with the data from the A Stock Market in China from 2004 to 2006. We find that, management disclosure shows great influence on the timeliness of annual reports. The reporting lags of the first quarter report next year and the information type of annual reports are both owing significantly negative relation to the reporting lags. And the releasing of Earnings Forecast and Earnings Express are both in a significantly positive association with the reporting lags. After controlling the common factors such as auditing opinion, EPS, the timeliness of annual reports is positively related to the information transparency in the coming period, companies that bringing the timing forward indicates a high level of information transparency and a low one of earnings management, and the ones that taking the timing backward suffer from a result in contrary. Thus we conclude different timing selection interprets different signals that the announcements convey. The contribution of this paper to the literature on timeliness is that it detects and proves the determinants of the timing of annual reports and the signals it conveys on the basis of the unique institutional environment in China, which is of great significance on the proof of the consequence of related regulations announced by SEC

Keywords: Management Disclosure, Timeliness, Market Reaction, Earnings Forecast, Earnings Express, First Quarter Report

JEL Classification: M41, M45, M47, G12, G15