Relative performance evaluation and the timing of earnings release

Guojin Gong, Laura Yue Li, Huifang Yin

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

Relative performance evaluation (RPE) compensates managers on their relative performance against a peer group. Since observing more peers’ performance allows managers to better estimate the performance level required to achieve RPE targets, we conjecture that releasing earnings later than peers facilitates managers to achieve targets by exploiting last-minute reporting discretion. Empirical evidence is consistent with our conjecture. Further, managers tend to select peers that release earnings more timely and delay own firms’ earnings releases to be later than peers’ after RPE adoption. Our evidence suggests strategic timing of earnings release and discretionary reporting in response to relative performance evaluation.

Original languageEnglish (US)
Pages (from-to)358-386
Number of pages29
JournalJournal of Accounting and Economics
Volume67
Issue number2-3
DOIs
StatePublished - Apr 1 2019

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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