Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 49, No. 5, pp.1087-1110
ISSN: 1226-1874 (Print)
Print publication date 31 Oct 2020
Received 10 Oct 2019 Revised 17 Jun 2020 Accepted 18 Jun 2020
DOI: https://doi.org/10.17287/kmr.2020.49.5.1087

Investor Attention and Corporate Disclosure Timing: Evidence from Korea

Yongsuk Yun ; Gun Lee ; So-Jin Yu
(First Author) Hannam University hwantasi@hnu.kr
(Corresponding Author) Changwon National University gunlee@changwon.ac.kr
(Co-Author) SUNY Fredonia So-Jin.Yu@fredonia.edu


Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper investigates the association between investor attention and the timing of the release of corporate information in the Korean stock market. The association provides the evidence on whether the investor demand for earnings information affects the managerial disclosure decision. Similar to a previous study that uses the Google Search Volume Index to measure investor attention, this paper re-measures investor attention using the Search Volume Index provided by Naver, which has the largest market share of all internet search portals in Korea. Using 9,526 firm-quarter observations, the paper regresses disclosure timing on investor attention. Empirical results show that managers facing greater investor attention announce quarterly earnings information on an earlier date than in the previous year, and they release earnings information during trading hours rather than non-trading hours. The findings indicate that managers consider timely disclosure to be an important factor in meeting investor interests. In addition, this paper sheds light on the role of individual/retail investors in managerial disclosure decisions, considering that the measure of investor attention primarily captures individual/retail investor interest.

Keywords:

disclosure timing, earnings announcement, managerial disclosure decision, investor attention, search volume index

Acknowledgments

This work was supported by 2020 Hannam University Research Fund. We appreciate anonymous reviewers for providing valuable comments.

References

  • Barber, B. M., T. Odean, and N. Zhu(2008), “Do retail trades move markets?,” The Review of Financial Studies, 22(1), pp.151-186. [https://doi.org/10.1093/rfs/hhn035]
  • Barry, C. B., and S. J. Brown(1985), “Differential information and security market equilibrium,” Journal of Financial and Quantitative Analysis, 20(4), pp.407-422. [https://doi.org/10.2307/2330758]
  • Barry, C. B., and S. J. Brown(1986), “Limited information as a source of risk,” The Journal of Portfolio Management, 12(2), pp.66-72. [https://doi.org/10.3905/jpm.1986.409052]
  • Bhushan, R.(1994), “An informational efficiency perspective on the post-earnings announcement drift,” Journal of Accounting and Economics, 18(1), pp.45-65. [https://doi.org/10.1016/0165-4101(94)90018-3]
  • Blankespoor, E., G. S. Miller, and H. D. White(2014), “The role of dissemination in market liquidity: Evidence from firms' use of Twitter™”. The Accounting Review, 89(1), pp.79-112. [https://doi.org/10.2308/accr-50576]
  • Brown, S., S. A. Hillegeist, and K. Lo(2004), “Conference calls and information asymmetry,” Journal of Accounting and Economics, 37(3), pp.343-366. [https://doi.org/10.1016/j.jacceco.2004.02.001]
  • Brown, N. C., T. E. Christensen, W. B. Elliott, and R. D. Mergenthaler(2012), “Investor sentiment and pro forma earnings disclosures,” Journal of Accounting Research, 50(1), pp.1-40. [https://doi.org/10.1111/j.1475-679X.2011.00427.x]
  • Bushman, R. M., and A. J. Smith(2001), “Financial accounting information and corporate governance,” Journal of Accounting and Economics, 32(1), pp.237-333. [https://doi.org/10.1016/S0165-4101(01)00027-1]
  • Collins, D. W., S. P. Kothari, and J. D. Rayburn (1987), “Firm size and the information content of prices with respect to earnings,” Journal of Accounting and Economics, 9(2), pp.111-138. [https://doi.org/10.1016/0165-4101(87)90002-4]
  • Da, Z., J. Engelberg, and P. Gao(2011), “In search of attention,” The Journal of Finance, 66(5), pp.1461-1499. [https://doi.org/10.1111/j.1540-6261.2011.01679.x]
  • deHaan, Ed, T. Shevlin, and J. Thornock(2015), “Market (in)attention and the strategic scheduling and timing of earnings announcements,” Journal of Accounting and Economics, 60(1), pp.36-55. [https://doi.org/10.1016/j.jacceco.2015.03.003]
  • DellaVigna, S. and J. M. Pollet(2009), “Investor inattention and Friday earnings announcements,” The Journal of Finance, 62(2), pp.709-749. [https://doi.org/10.1111/j.1540-6261.2009.01447.x]
  • Drake, M. S., D. T. Roulstone, and J. R. Thornock (2012), “Investor information demand: Evidence from Google searches around earnings announcements,” Journal of Accounting Research, 50(4), pp.1001-1040. [https://doi.org/10.1111/j.1475-679X.2012.00443.x]
  • Gennotte, G., and B. Trueman(1996), “The strategic timing of corporate disclosures,” The Review of Financial Studies, 9(2), pp.665-690. [https://doi.org/10.1093/rfs/9.2.665]
  • Graham, J. R., C. R. Harvey, and S. Rajgopal(2005), “The economic implications of corporate financial reporting,” Journal of Accounting and Economics, 40(1), pp.3-73. [https://doi.org/10.1016/j.jacceco.2005.01.002]
  • Ha, J. S., D. Kim, and Y. Lee(2019), “Investor attention and market reaction to analysts’ recommendation revisions: Evidence from Korean data,” Financial Planning Review, 12(2), pp.61-77. [https://doi.org/10.36029/FPR.2019.05.12.2.61]
  • Hirshleifer, D., and S. H. Teoh(2003), “Limited attention, information disclosure, and financial reporting,” Journal of Accounting and Economics, 36(1), pp.337-386. [https://doi.org/10.1016/j.jacceco.2003.10.002]
  • Kahneman, D.(1973), Attention and effort (p. 246), Englewood Cliffs, NJ: Prentice-Hall.
  • Kanagaretnam, K., G. J. Lobo, and D. J. Whalen (2007), “Does good corporate governance reduce information asymmetry around quarterly earnings announcements?”, Journal of Accounting and Public Policy, 26(4), pp. 497-522. [https://doi.org/10.1016/j.jaccpubpol.2007.05.003]
  • Kim, R.(2018), “An empirical study on the relation between search volume, investors trading, and stock returns,” Korean Journal of Financial Engineering, 17(2), pp.53-85. [https://doi.org/10.35527/kfedoi.2018.17.2.003]
  • Koo, P., and M. Kim(2015), “A study on the relationship between internet search trends and company’s stock price and trading volume” The Journal of Society for e-Business Studies, 20(2), pp.1-14. [https://doi.org/10.7838/jsebs.2015.20.2.001]
  • Merton, R. C.(1987), “A simple model of capital market equilibrium with incomplete information,” The Journal of Finance, 42(3), pp.483-510. [https://doi.org/10.1111/j.1540-6261.1987.tb04565.x]
  • Sengupta, P.(2004), “Disclosure timing: Determinants of quarterly earnings release dates,” Journal of Accounting and Public Policy, 23(6), pp. 457-482. [https://doi.org/10.1016/j.jaccpubpol.2004.10.001]
  • Skinner, D. J.(1994), “Why firms voluntarily disclose bad news,” Journal of Accounting Research, 32(1), pp.38-60. [https://doi.org/10.2307/2491386]
  • Patell, J. M., and M. A. Wolfson(1982), “Good news, bad news, and the intraday timing of corporate disclosures,” The Accounting Review, 57(3), pp.509-527
  • Verrecchia, R. E.(1983), “Discretionary disclosure,” Journal of Accounting and Economics, 5, pp.179-194. [https://doi.org/10.1016/0165-4101(83)90011-3]
  • Vlastakis, N., and R. N. Markellos(2012), “Information demand and stock market volatility,” Journal of Banking and Finance, 36(6), pp.1808-1821. [https://doi.org/10.1016/j.jbankfin.2012.02.007]
  • Yun, Y., and G. Lee(2017), “The effect of investors’ attention on executive compensation and CEO turnover,” Korean Accounting Information Review, 35(3), pp.137-158. [https://doi.org/10.29189/KAIAAIR.35.3.6]
  • Yun, Y., and S. W. Yoo(2017), “Investor Attention and Voluntary Management Forecasts,” Korean Accounting Review, 42(4), pp.177-219. [https://doi.org/10.24056/KAR.2017.05.001]

• The author Yongsuk Yun is an Assistant Professor in the Department of Accounting at Hannam University. Yongsuk Yun earned his PhD and Masters in accounting from Korea University. His research interests are in information demand, disclosure, and audit issues.

• The author Gun Lee is an assistant professor of Accounting at Changwon National University. Gun Lee received his MSc and PhD in business administration from Korea University. His research interests include corporate disclosure, executive structure and compensation, and corporate governance.

• The author So-Jin Yu is an assistant professor of Accounting at the State University of New York at Fredonia. So-Jin Yu earned degrees of a Bachelor Science of Business Administration and a Master of Professional Accountancy from University of Nebraska-Lincoln, and Accounting Ph.D from Korea University.