Any time a company has to disclose bad news, the theory goes, they will most likely file it late in the day on Friday to soften the effect of an auditor resignation/restatement/announcement of massive fraud. Seems logical enough.
Audit Analytics dug a bit deeper on the idea, looking specifically at the restatements that have been filed so far in 2013:
[T]here is no obvious Friday effect for the population of 2013 restatements. Restatement filings are delivered more or less uniformly across the week, with about 1/5 filed on Friday. However, 57% of the restatements were filed after the markets close at 4:00.The effect is further amplified when we look at companies traded on major markets. This makes sense, since one would expect such companies to be more sensitive to market reactions than OTC companies would. If we narrow the population only to companies traded on NYSE, NASDAQ, or AMEX, the percentage of filings made after 4PM increases to 64%.
Here's what they concluded:
[T]here is nothing wrong with filing a restatement after 4PM. SEC requires disclosure within 4 days of the discovery, and there is absolutely no requirement to file before closure of the markets. Caveats aside, though, 73% looks like something slightly more coordinated than sheer coincidence.
Never mind the post-4 pm average for a minute, how about those high percentages on Thursdays? It appears companies are quick to take advantage of the fact that a lot of people like to skip Fridays OR are too hungover to care whether your company issued such sloppy numbers that it requires a do-over.
Any time you can take advantage of human nature, especially in an area as sedative as financial reporting, it's probably a smart move.
TGIF: The 4PM News Dump [Audit Analytics]