A:

The date and time that a company releases its earnings is very important because investors looking to buy or sell the particular security are counting on the information to help make a decision. When the earnings are released, the price of the security is almost always affected if it differs from the expected amount; this is often known as a surprise.

When an earnings deadline is missed, serious problems can occur in the stock market, as investors begin to worry about what might have caused the company to miss the deadline. Even if the reason is completely innocent, the notion that something MUST be wrong will always be in the back of investors' minds. Missing deadlines will almost always have a negative effect on the price of the stock, and volatility will surely increase.

However, stock exchanges have rules in place to protect investors from this volatility. For example, Nasdaq stock market rules say that missing a deadline could result in the market immediately suspending trading and delisting the company's common stock. This rarely happens, as companies are usually able to request an extension to get the financial statements released prior to being delisted.

If the company you own shares in has just missed its earnings deadline, it may not be reason to panic and dump the lot right away, but it should be a signal to watch it closely. You do not want to be left holding the bag if it turns out that the financial statements were delayed for a disastrous reason, such as accounting fraud.

Learn more about this in Strategies For Quarterly Earnings Season and The Flow Of Company Information.

RELATED FAQS
  1. Health problems caused me to take my RMD after the deadline. Can I appeal my case ...

    When you missed your required minimum distribution (RMD), you should have sent in a letter of explanation and filed IRS Form ... Read Answer >>
  2. If a stock is delisted, do shareholders still own the stock?

    If a company has been delisted, it is no longer trading on a major exchange, but the owners of the company shares are not ... Read Answer >>
Related Articles
  1. Investing

    Digging For Profitable Delistings

    Deregistration can provide opportunities for savvy investors. We'll show you how to cash in.
  2. Investing

    The Dirt On Delisted Stocks

    Listed securities are "the cream of the crop". Find out how a firm can lose that status and why you should be wary.
  3. Investing

    Will Toshiba be Delisted from the Tokyo Stock Exchange?

    The technology conglomerate has missed a second deadline to file third-quarter earnings.
  4. Taxes

    Get a 6-Month Tax Extension

    Discover how to get some extra time from the IRS, without paying a hefty penalty for the privilege.
  5. Investing

    Why Companies Delisted from Indexes Can Be a Buy (OI)

    Learn about a value-investing strategy that takes advantage of stocks that may represent a bargain when they're delisted from a benchmark index.
  6. Taxes

    Seven Deadly Sins to Avoid During Tax Season

    Make sure your tax return is error-free before filing with these seven tips.
  7. Retirement

    Individual 401(k) vs SEP IRA: Loans and Deadlines

    Individual 401(k)s and SEP IRAs vary in Roth contributions, loan provisions and funding deadlines.
  8. Investing

    Tips For Investors In Volatile Markets

    Find out what to look out for when trading during market instability.
  9. Taxes

    Estimated Taxes: Back To Basics

    Will you owe estimated taxes for the year? Here are some rules that apply and tips on avoiding any associated penalties.
RELATED TERMS
  1. Delisting

    The removal of a listed security from the exchange on which it ...
  2. Time Arbitrage

    An opportunity created when a stock misses its mark and is sold ...
  3. Street Expectation

    The average estimate of a public company’s quarterly earnings ...
  4. Accounting Earnings

    The amount of money a company has earned during a given period, ...
  5. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Hot Definitions
  1. Payback Period

    The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
  2. Collateral Value

    The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Current Account

    The difference between a nation’s savings and its investment. The current account is defined as the sum of goods and services ...
  5. Liability

    Liabilities are defined as a company's legal debts or obligations that arise during the course of business operations.
  6. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
Trading Center