Browsing by Subject "Liquidity"
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Item The Effect of Earnings Announcement Timing on Liquidity(People and Global Business Association, 2013) Gaynor, Gregory B; Morton, Richard M; Morse, Joel N.The proportion of after-market-close (AMC) earnings announcements has recently increased to more than 40% of the total number of earnings announcements (Berkman & Truong, 2009). Doyle and Magilke (2009) conclude that managers do not announce AMC to hide bad news; however, they do not directly address other explanations for the AMC announcement increase. Thus, the cause(s) remains an open question. Interestingly, the increase in AMC earnings announcements has coincided with the emergence of a 24/7 news environment and a marked increase in noise trading. We posit that managers are increasingly announcing earnings AMC instead of before-market-open (BMO) to take advantage of this increased noise trading—thereby increasing the liquidity of their stock. We show evidence, after controlling for other factors, that announcing AMC instead of BMO increases liquidity. In addition, the relationship between AMC and liquidity is increasing in analysts’ coverage—consistent with the view that AMC announcements generate the largest increase in liquidity for those stocks with high investor interest.Item The impact of internal control weaknesses on firms' cash policies(SSRN, 2016) Pevzner, Mikhail; Gaynor, GregoryWe study the association between firms' Section 302 and Section 404 internal control weaknesses and these firms' cash-to-cash flow sensitivities. We also examine whether the presence of the internal control weaknesses affects the relationship between firms' asset liquidity and stock liquidity. We find that the presence of Section 404 internal control weaknesses is associated with stronger cash-to-cash flow sensitivities and with weaker impact of higher asset liquidity on stock liquidity. Our results suggest that internal control weaknesses increase firms' reliance on internal, as opposed to external, financing. Also, internal control weaknesses increase uncertainty over future uses of cash, thereby reducing the positive impact of higher relative cash balances on stock liquidity. Thus, our study provides additional evidence on the potential costs of internal control weaknesses.Item Management Earnings Forecasts, Information Asymmetry, and Liquidity: An Empirical Investigation(SSRN, 2007) Pevzner, MikhailThis study investigates (1) whether forecasting firms have lower liquidity prior to the issuance of a management-earnings forecast than non-forecasting firms and (2) whether forecasting earnings has a persistent affect on a firm's liquidity. I find that, first, forecasting firms have greater liquidity in the period prior to a forecast. Second, while issuing forecast increases liquidity in over short windows, this effect is not significant over longer windows. Third, initiating or ceasing the issuance of earnings forecasts has no significant long-term effect on the firm's liquidity. Combined, these results suggest that management earnings forecasting decision does not appear to be driven by liquidity-improvement goals, and that management earnings forecasts do not appear to strongly affect firms' liquidity.