January 22, 2020

The Myth of the Friday Earnings Release

At one point or another, most of us have clients who want to avoid scrutiny of sub-par results and consider the “Friday earnings release” approach. Legend has it that everyone will be too busy with their weekend to pay any attention to Friday news.

Sadly, this WSJ article confirms that the opposite is true: because fewer companies release earnings on Fridays, there tends to be more attention – and market volatility – for those who do. The most popular days for earnings are Tuesdays, Wednesdays & Thursdays – typically three or four weeks into earnings season. And here’s what the article says happens on those days:

Attention paid to companies’ earnings—measured by metrics such as downloads of regulatory filings, Google searches and news articles—drops on popular reporting days, said Ed deHaan, an associate professor of accounting at the University of Washington’s Foster School of Business. Mr. deHaan and his colleagues analyzed the timing and impact of 120,000 results announcements in 2015 and found that trading volumes of individual stocks also went down on busy earnings days. Their findings were published in the Journal of Accounting and Economics.

The article also points out that companies may miss out on attention if they hold their earnings call at the same time as industry competitors. It spotlights Citrix, whose earnings date typically conflicts with Microsoft’s – Citrix is now considering moving its earnings date based on unsolicited feedback from analysts & investors. A move might be worth some thought if you’re not getting the attendance you want…

Using Tax Shelters? It May Affect Your ESG Reporting

Recently, the Global Reporting Initiative – one of the longer-standing and more widely-adopted frameworks for sustainability reporting – published a new tax disclosure standard that’s intended to discourage “tax avoidance.” See pages 5-13 for the recommended disclosures – the “effective date” is next January, but early adoption is encouraged. Here’s an excerpt from GRI’s announcement:

The GRI Tax Standard is the first global standard for comprehensive tax disclosure at the country-by-country level. It supports public reporting of a company’s business activities and payments within tax jurisdictions, as well as their approach to tax strategy and governance. Global investors, civil society groups, labor organizations and other stakeholders have all signaled their backing for the Tax Standard, as it will help address their growing demands for tax transparency.

The Tax Standard has been developed in response to concerns over the impact tax avoidance has on the ability of governments to fund services and support sustainable development – and to give clarity on how much companies contribute to the tax income of the countries where they operate.

Tomorrow’s Webcast: “Cybersecurity Due Diligence in M&A”

Tune in tomorrow for the webcast – “Cybersecurity Due Diligence in M&A” – to hear Jeff Dodd of Hunter Andrews, Sten-Erik Hoidal of Fredrikson & Byron and Jamie Ramsey of Calfee Halter discuss how to approach cybersecurity due diligence, and how to address and mitigate cybersecurity risks in M&A transactions.

Liz Dunshee