SEC filings, regulatory deadlines, and capital market consequences

SYNOPSIS: Timely disclosure of financial statement information is a critical requirement for firms and wellfunctioning capital markets. Yet, every quarter or year, a non-trivial number of firms are late in filing their financial statements. This paper identifies and probes various capital market consequences for late filings of quarterly and annual financial statements. It examines the short- and long-window reaction to late filings, as well as how equity investors process statements accompanying late filing announcements, such as managers declaring intentions to file within/outside the SEC’s allowed grace periods. This paper documents that delayed quarterly filings have distinctly different valuation implications than delayed annual filings over the short and long run, and that accounting problems play a unique role in signaling the seriousness of the delay. It also shows that investors do not accept management’s delay-related assertions at face value, and that delayed filing announcements signal continued poor performance that is not fully reflected in stock prices at the time the announcements are made. Overall, this paper sheds new light on important capital market consequences of filing financial statements late