Check the sales growth status
Check the sales growth status
A B S T R A C T
Investors and analysts have called for more timely disclosure of corporate information.
Responding to these demands, some retail firms issue comparable store sales (CSS) on a monthly or a quarterly basis in addition to an annual basis.
This study examines whether a timely disclosure of CSS provides value-relevant information to market participants by examining investors’ and financial analysts’ responses at the time of CSS disclosures (short-horizon) and over the month or the quarter (long-horizon).
We find that both monthly and quarterly CSS are associated with contemporaneous market returns and analyst forecast revisions.
More importantly, we find that quarterly CSS news becomes less important to investors when firms provide more timely CSS information, indicating that monthly CSS reports may preempt the information content of quarterly CSS.
Additional tests show that investors and analysts rely less on CSS if CSS news and earnings (sales) news are inconsistent.
Conclusion
The reporting of CSS information (i.e., same-store sales from comparable periods in past years) by a large number of retailers provides a unique setting in which to examine the value relevance of more timely non-GAAP reporting.
This study examines how investors and financial analysts use retail CSS reported monthly and quarterly. We find that a firm’s disclosure of CSS growth provides value-relevant information to both investors and analysts.
CSS growth is positively associated with contemporaneous stock price returns.
We find, however, that quarterly CSS news is not associated with market returns for firms that also issue monthly CSS because, we surmise, monthly reports have preempted the information contained in the quarterly CSS news.
The results imply that the market may respond to more timely CSS information as manifested in firm valuation.
We find that CSS growth information is also useful to analysts in adjusting their projections.
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Check the sales growth status