SHS Web Conf.
Volume 34, 2017The 17th Annual Conference of the Asian Academic Accounting Association (2016 FourA Conference)
|Number of page(s)
|Financial Accounting and Reporting
|14 February 2017
Investors’ response on the deviation between quarterly and annual earnings
1 Universiti Putra Malaysia, Department of Accounting and Finance, Faculty of Economics and Management, 43400 Serdang, Selangor, Malaysia
2 Universiti Utara Malaysia, Tunku Intan Shafinaz School of Accountancy, Faculty of Business, 06010 Sintok, Kedah, Malaysia
3 Universiti Malaysia Pahang, Canseleri Tun Abdul Razak, 26600 Pekan, Pahang, Malaysia
4 Universiti Sains Malaysia, School of Management, 11800 USM, Penang, Malaysia
* Corresponding author: email@example.com
Despite the benefits of timely information, concerns have been raised on the reliability of the quarterly accounts. The occurrence of deviation between audited annual accounts and cumulative quarterly accounts indicates the misstatements in the latter. This study examines investors’ response towards the occurrence of the deviation. Data is based on 792 listed companies of Bursa Malaysia in 2012. The results of the OLS regression show that the companies without earnings deviation have significantly higher earnings response coefficient than companies experiencing earnings deviation. It is also found that understated quarterly earnings companies have higher earnings response coefficient than overstated companies. Results imply that investors place higher reliability on the quarterly accounts produced by companies without earnings deviation. Higher reliability is placed on the understated quarterly earnings companies as compared to overstated companies. Findings suggest that investors do value the occurrence and types of earnings deviation. Therefore, steps should be taken to overcome the occurrence of deviation.
© The Authors, published by EDP Sciences, 2017
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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