Corporate Disclosure of the Decision to Change the Fiscal Year-End

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This paper investigates whether registrants comply with SEC rules designed to provide timely notification and transparent disclosure of the effects of a change in fiscal year-end. For a sample of 79 firms, the Form 8-K announcement of the change was filed late 25% of the time and no announcement was available for an additional 14% of the firms. In the subsequent Form 10-K, roughly half of the firms did not report operating results for both the transition period and a comparative period from the prior year, as required by the SEC. The rate of non-compliance was higher for firms audited by non-Big-6 firms. Non-compliance is more important if poor disclosure occurs in conjunction with income management. In this regard, we found an unusually high frequency of losses reported in the transition period that results from a fiscal year change (relative both to the firms' prior experience and to other COMPUSTAT firms).

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Research in Accounting Regulation

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