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Timely disclosure of financial information is critical for well functioning capital markets, and a recent surge in late SEC filings has led to increased interest in their consequences. We find that the market reacts negatively to announcements of late filings, even to potentially benign announcements that indicate management intends to file within the SEC’s allowed grace period. We also find that the reaction is more negative for late 10-Qs than late 10-Ks when accounting reasons are cited for the delay and that the market anticipates which late 10-Q filers will subsequently fail to file within the SEC’s allowed grace period, but only when accounting reasons cause the delay. In addition, we show that abnormal returns continue to decline during the months following the late filing announcement but that the decline is less pronounced when accounting reasons explain the delay. Finally, we find that operating performance also declines during the months following the delay announcement. Our study contributes to the literature by being the first to examine the short-window market reaction to managers’ announcements that they will file late 10-Qs and 10-Ks. Our findings also indicate that the announcement of late 10-Qs has distinct valuation implications from the announcement of late 10-Ks, and suggests that market participants are relatively better at understanding the valuation implications of late filings when accounting reasons explain the delay.

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asset pricing, accounting problems, late filing, financial statements, market efficiency, drift