Friday evening is an opportunistic time for corporations to announce earnings. The lack of attention paid combined with a delayed reaction to news gives corporate executives an opportunity to act by buying or selling shares. These factors cause some companies to postpone reporting from earlier in the week.

Professors at Cornell University and Simon Fraser University analyzed quarterly earnings announcements from 1999 through 2013. They found most companies announce their results between Tuesday and Thursday (more than 20% of all companies per day), 13.2% of companies report on Monday and just 6.3% report on Fridays. Of those reporting on Friday, most do so on Friday morning. A mere 1.08% of all companies announce earnings on Friday evenings.

The reporting day was changed for about half of all earnings reports at some point in the sample period. Switching to a Tuesday from a different day in the previous quarter was associated with better news being reported. Companies that switched to Friday tended to have “significantly worse news.”

There were other common traits among companies reporting on Friday evening. They are smaller and have less institutional ownership, less analyst coverage and a higher price-to-book ratio than companies that have never announced on a Friday evening. Their earnings are more likely to be disappointing, with Friday evening having “the most negative news.” These companies are also five times more likely to be liquidated or dropped from an exchange and more than twice as likely to be delisted because of completion of merger within 120 of the earnings announcement.

A reason for waiting until Friday evening to report is the lack of immediate attention. Most analysts and portfolio managers will have left for the week. This delays the reaction to the announcement, resulting in a post-earnings announcement drift (PEAD). PEAD is the change in a stock’s price following an earnings announcement. The relatively longer PEAD gives executives of these companies an opportunity to act on the news. They take advantage of the PEAD by trading in the direction of the earnings surprise—that is, selling on negative news and buying on positive news.

Source: “When Is the Best Time to Hide Earnings News?,” Roni Michaely, Amir Rubin and Alexander Vedrashko, July 10, 2015.

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