The Delicate Dance of Timing Earnings Releases
Which day of the week is optimal for reporting financial results? According to a recent article in The Wall Street Journal, most companies report on Tuesdays, Wednesday and Thursdays, and the practice of releasing disappointing results on a Friday is generally a counterproductive strategy.
The calculus facing CFOs and heads of investor relations when timing earnings releases is surprisingly complex. Consider the conventional wisdom that Friday announcements draw less attention as focus shifts to the weekend. This rule of thumb leads many companies with favorable financial results to avoid Friday releases, while many with disappointing results embrace Friday releases. However, experts cited in the article make a convincing case that this conventional wisdom should be turned on its head. “The ecosystem of investors and intermediaries is capacity-constrained, which results in a reduced response to earnings releases on busy days,” said Professor Ed deHaan, who added that “market volatility can be stronger on a Friday because of the overall lower number of earnings releases.”
Another major factor for companies to consider is the timing of competitors’ earnings releases. For example, a smaller company with good news to report might be overlooked if one or more larger competitors report on the same day.
Finally, “it is important for a company to adhere to its chosen date once it has made an official announcement,” said Barry Star, CEO of Wall Street Horizon Inc., a data provider. “If dates are moved and appearances are canceled, this sends a signal to the market.”