Why Firms Schedule Earnings After Fed Meetings

A simple shift in the timing of companies’ earnings announcements can improve firms’ investment decisions and make their stocks easier to trade.

A new paper by Professor Xu Jiang of Duke University’s Fuqua School of Business found that when companies schedule earnings announcements after Federal Reserve meetings, they benefit from the Fed’s signals about the direction of the economy. As firms and analysts incorporate the Fed’s insights into their forecasts, investors gain greater clarity about the companies’ prospects, improving stock liquidity and helping firms make more successful capital investments.

In “Dancing to the Fed's Tune: Earnings Announcement Clustering and Analyst Forecast Informativeness Around FOMC Meetings,” Jiang and his co-authors* investigated why some companies intentionally delay their earnings announcements and schedule them around the Federal Open Market Committee (FOMC) meetings, despite the risk that investors may interpret the delay from their usual patterns as an attempt to hide bad news about the firm.

“I noticed that many delays were rescheduled near the FOMC meetings,” Jiang said. “That kind of puzzled me, because firms don't want to be seen as strategically timing their earnings announcements.”

Public companies typically follow regular earnings announcement schedules, and deviating from those patterns can raise suspicions among investors, Jiang said. “Silence and delay usually means bad news,” he said.

Why, then, are companies willing to engage in behavior that investors often see as a red flag?

Waiting for better information

The FOMC meets regularly throughout the year to make decisions about interest rates and monetary policy. But those meetings also provide markets with new insights about the broader economy. 

The researchers hypothesized that waiting for the Fed’s signals about the economy would improve the informativeness of both company and analyst forecasts, with benefits that outweigh the reputational risks.

To test this idea, the co-authors analyzed large numbers of earnings announcements and compared their timing with the FOMC calendar. They found a clear pattern: firms were more likely to delay earnings announcements so they would fall shortly after Fed meetings.

The effect was especially strong when firms originally planned to report only a few days before an FOMC meeting. In those cases, companies seemed willing to accept some reputational risk if the informational benefits are large enough.

The researchers also found that analysts often wait until after FOMC meetings to revise their forecasts, allowing them to incorporate the Fed’s latest economic signals.

The researchers found that after FOMC meetings—especially meetings containing unexpected news or “surprises”—analyst forecasts became more informative and more accurate.

The findings suggested that firms strategically time earnings announcements so analysts can incorporate the Fed’s outlook into their forecasts. This coordination leads to forecasts that are more accurate and better aligned with the firm's actual performance.

Obviously, this strategy has limits, Jiang said. Firms could not postpone announcements for weeks without raising concerns from investors or regulators.

“When the planned announcement is far away from the FOMC meeting—even by two weeks—there’s no way a company can reschedule,” Jiang said.

Willing to take the risk

Better forecasts do not just help analysts. The researchers found that they also create measurable economic value for firms.

One benefit is lower bid-ask spreads, a sign that investors feel more assured about a company’s value, making its stock easier to trade. 

The researchers also found evidence that firms make more efficient investment decisions after incorporating the Fed’s information. More accurate analyst forecasts help stock prices better reflect a company's fundamentals, giving firms clearer signals when making investment decisions.

“If the fundamentals are good, you invest more. If the fundamentals are bad, you invest less,” Jiang said.

Still, the benefits of delaying announcements come with costs, Jiang said.

“Investors might be skeptical if you’re strategically doing this,” Jiang said. “Are you trying to strategically benefit yourself at the expense of investors?”

If companies delay earnings announcements because they are waiting for major economic data, communicating that rationale clearly to investors could reduce suspicion, he said.

Explain delays to investors

The findings may also apply beyond Fed meetings, Jiang said. Other major economic announcements—such as inflation or employment reports—could have similar effects on how firms communicate with investors.

Jiang also warned that excessive clustering around Fed meetings could overwhelm investors with too much information at once. “There could be an information overload issue,” he said.

While the research reflects a world of quarterly reporting, the recent SEC proposal for optional semiannual reports could give firms even more flexibility to strategically time announcements around macroeconomic events, Jiang noted.

The paper ultimately challenges a common assumption in financial markets: that delayed announcements automatically signal bad news.

“Our finding is that, for firms that delay announcements close to FOMC meetings, investors should not assume they are hiding bad news,” Jiang said. “In many cases, they’re trying to make better decisions by helping analysts make better predictions.”

According to Jiang, some investor relations professionals acknowledged in conversations with the researchers that the Fed’s economic outlook plays an important role in corporate communication strategies.

“If this is a reason for you to delay the earnings announcement, explain that to investors,” Jiang said.

* Co-authors:

Junjie Che, The Chinese University of Hong Kong (CUHK) - Department of Finance

Sudipto Dasgupta, Chinese University of Hong Kong, ABFER, CEPR, and ECGI; European Corporate Governance Institute (ECGI)

Liyan Yang, University of Toronto - Rotman School of Management