The Strategic Timing of Management Forecasts

Abstract

In this study, we examine the strategic intraday and intraweek timing of management forecast announcements based on whether they contain good or bad news. In contrast to past research using highly visible earnings announcements, unscheduled voluntary management forecasts provide a setting in which there may be greater benefits to strategic announcement timing. We find strong evidence that bad news tends to be strategically released after the market closes and on Fridays. In addition, we find evidence that strategically timed bad news forecast announcements that are released after the market closes are associated with less negative market returns, less trading volume, and less market volatility. Thus, our results suggest that the strategic timing of bad news forecasts during times of lower investor attention is successful at mitigating negative market reactions.