Abstract: This study finds that greater asymmetric timeliness of earnings in reflecting good and bad news is associated with slower resolution of investor disagreement and uncertainty at earnings announcements. These findings indicate that a potential cost of asymmetric timeliness is added complexity from requiring investors to disaggregate earnings into good and bad news components to assess the implications of the earnings announcement for their investment decisions. Such a disaggregation impedes the speed with which investor disagreement and uncertainty resolve. The findings indicate asymmetric timeliness also delays price discovery at earnings announcements. We also find a positive relation between asymmetric timeliness and stock returns during the earnings announcement period after the initial price reaction to the announcement, which is consistent with resolution of valuation uncertainty. However, we do not find clear evidence of more net stock purchases during this period by insiders of firms with greater asymmetric timeliness.
Code for volume and volatility resolution variables: code // readme
Information from Implied Volatility Comovements and Insider Trades
Abstract: We investigate whether implied volatility comovements reflect the degree to which a firm’s private information is informative about future macroeconomic news. We compute IVC, the comovement of the implied volatilities between the firm and the aggregate market. IVC measures the extent to which option investors expect the coincidence of future firm and macroeconomic information arrival. Using insider purchases as a proxy for firms’ private information and future aggregate equity returns as a proxy for macroeconomic news, we find that IVC moderates the association between firms’ private information and macroeconomic news. Consistent with this finding, we also find that firms with higher IVC have stock returns that are more informative about future aggregate earnings and have stronger aggregate market reactions to their earnings announcements. Overall, IVC effectively measures the relevance of a firm’s private information to aggregate markets.
Analyst Forecast Revision Consistency and Bias in Earnings Forecast Revisions
Abstract: We address whether analysts bias earnings forecast revisions and convey the bias using forecast revision consistency, i.e., the extent to which analyst reports with earnings forecast revisions include stock recommendation and target price revisions consistent in sign with the earnings forecast revisions, the sign of which is the sign of earnings forecast revision. Incentives to curry favor with management can constrain analysts to issue biased earnings forecast revisions. As predicted, we find that forecast revision consistency is (i) positively associated with the market reaction to the analyst report; (ii) positively associated with consensus analyst forecast error (AFE), i.e., actual earnings minus the consensus of the analysts’ forecasts; and (iii) negatively associated with earnings announcement returns, incremental to AFE. Absolute forecast revision consistency is smaller (larger) when firms eliminate (initiate) guidance. These findings are consistent with analysts using forecast revision consistency to convey information about bias in their earnings forecast revisions.
Latest Research Posts
- AAA presentation: The risk relevance of restructuringIt was a pleasure to present my paper at the AAA Annual Meeting in Chicago this year.
- AAA discussion: Reassessed earnings with capitalized intangiblesIt was a privilege to discuss this paper by Aneel Iqbal, Anup Srivastava, Shivaram Rajgopal, and Elnaz Basirianmahabadi at the AAA Annual Meeting in Chicago.
- AAA Discussion: Managerial Learning and Goodwill ImpairmentsI had the opportunity to discuss this paper, by Yanrong Jia, Yiwen Li, and Huihao Yan, at the AAA annual meeting in Chicago.
- EAA Discussion: Talking about the future to address the legitimacy gap: data breaches and forward-looking performance disclosureIt is great to have the opportunity to discuss “Talking about the future to address the legitimacy gap: data breaches and forward-looking performance diclosure” by Yanlei Zhang, Wenping Zhang, and QiQi Jiang.
- Updated version of “The risk relevance of restructuring”A little tighter for journal submission.
- The most recent version of “The risk relevance of restructuring”The most recent revision provides a more balanced (less human capital-focused) treatment of restructuring. It also includes all new tables and a little more clarity overall.
- Presentation at the 19th EIASM Interdisciplinary Conference on “Intangibles, Sustainability, and Value Creation – Reporting, Management, and Governance”It was a pleasure to present my paper, “The risk relevance of restructuring” at the conference.
- Discussion: Under the radar? Discretionary impairments of finite and indefinite intangible assetsIt was a pleasure to discuss this paper, by Gopal Krishnan, Alexander Liss, Ulf Mohrmann, and Jan Riepe, at the Temple conference.
- Temple conference presentation: The risk relevance of restructuringA pleasure to have the chance to present my paper, “The risk relevance of restructuring.”
- Discussion: Semantic progression in firm disclosure: The role of accounting conservatismI had the pleasure of discussing this paper, by Jason Moon, at the AAA Annual Meeting. My slides are attached.
- Discussion: How important is internal information asymmetry for firm-level productivity?I had the pleasure of discussing this paper, by Vishal Baloria, Trent Krupa, and David Weber, at the AAA Annual Meeting. My slides are attached.
- Missouri Presentation
- Most current version of The risk relevance of restructuringThe most current version of my paper on the risk relevance of restructuring, now titled “Employment beta and the risk relevance of restructuring.”
- Syracuse WorkshopSincere gratitude for the folks at Syracuse inviting me out. The slides and latest version of the paper are attached here The risk relevance of restructuring:
- The risk relevance of restructuringThe most recent version of my paper. Abstract: This study investigates the degree to which restructuring expense reveals systematic risk. Restructuring expense includes costs of employee termination and relocation, and therefore it provides information about when and to what degree the firm is reducing an important factor of production, labor. Firms reduce labor when they… Read more: The risk relevance of restructuring
- FARS 2024 DiscussionMy discussion of “Managerial myopia and the effect of investment growth on equity value” is below. The paper was written by Paul Irvine, Shin Kwon, and Steven Lim. It was a privilege to have the opportunity to discuss it.
- CFEA 2023: The risk relevance of restructuringMy presentation for the CFEA conference at Rutgers University on November 4, 2023.
- AAA discussions 2023These are my discussions from the AAA Annual Meeting. The first is “Establishment-level life cycle and analysts’ forecasts” by Sudipta Basu, Xin Dai, and Caroline Lee: Establishment-Level Life Cycle Discussion The second is “The bright side of career concern: CEO tenure and narrative disclosure complexity” by Marwa Soliman: CEO Tenure Discussion
- brownbag slides and paperCurrent rough draft of the paper Brownbag slides
- Slides I presented at Robert Bushman’s SeminarSome slides I presented at Robert Bushman’s seminar. I discussed/described Three papers. First was one of the more impactful papers on human/organizational capital, Eisfeldt and Papanikolaou’s “Organizational Capital and the Cross Section of Expected Returns.” Second was my dissertation, “Organizational Capital and the Effects of Technology Shocks on the Characteristics of Earnings.” Finally, I presented… Read more: Slides I presented at Robert Bushman’s Seminar
- AAA discussions 2022 (San Diego)In August I discussed three papers for the American Accounting Association Annual Meeting in San Diego and virtually. It was a valuable opportunity for me to read some great papers, think about the related literatures, and share some thoughts. I generally try and keep my discussions at a high-level at AAA, as many of the… Read more: AAA discussions 2022 (San Diego)
- Updated CV TemplateI updated my CV this summer, and used LaTeX to do so. I borrowed heavily from this template, but I made some modifications to adapt it for accounting academia. I am also making my source code available and you can see the most current version of my CV here.
Vivek Raval 