The Impact of Announcement Timing on the Informativeness of Earnings and Dividends

We relate the informativeness of earnings and dividend announcements to their timing relative to the fiscal quarter end to which the earnings pertain. Evidence is provided that the information content of earnings decreases as the timing of its announcement relative to the fiscal quarter end increases, and that such information erosion is more pronounced for smaller firms. Evidence is also provided that the information content of dividend announcements increases as its timing relative to the fiscal quarter end increases, and that such information enhancement is relatively more pronounced for larger firms. The results suggest that preannouncement information precision and announced information precision have offsetting effects on the informativeness of financial information, and that the nature of the offset depends on the type of information and firm size. More specifically, the predisclosure information effect is more pronounced for earnings and small firms, whereas the announced (new) information effect is more pronounced for dividends and large firms