City University of Macau FOB Assistant Professor Publishes in Journal of Corporate Finance, an ABS 4–Rated Leading International Journal

Journal of Corporate Finance is widely regarded as a top-tier international journal in finance, accounting, and corporate finance research. It is rated ABS (AJG) 4 and ABDC A*, and is also classified as a CAS 1st-tier (TOP) journal, indexed in SSCI, and ranked in JCR Q1, with significant influence on global research in economics, business, finance, and accounting.

Main Summary

This study finds that financial analysts strategically choose the timing of their disclosures when releasing negative news. Analysts are more likely to issue downward earnings forecast revisions during weekday non-trading hours, as these releases attract less market attention and trigger weaker negative stock price reactions. This strategic behavior is more pronounced for firms with more opaque information environments and for analysts with less experience, but is less evident for analysts affiliated with large brokerage firms and for low-leverage firms.

Focusing on the timing of analysts’ forecasts released during weekday non-trading hours, this study examines the characteristics and implications of forecast information across different release windows and how such timing shapes market information flows and financial communication practices. Overall, the findings provide useful insights into information transmission mechanisms in capital markets and also demonstrate the continued commitment and academic strength of both the University and the Faculty in producing high-impact international research.

 “The timing of your decision is just as important as the decision you make.”
—John C. Maxwell

Details

The article at a glance

Bad news moves prices—but when it’s released matters. Analysts tend to share negative forecast updates after hours on weekdays, when the stock market’s first reaction is typically less sharp.

What is a “forecast cut”?

A forecast cut (downward forecast revision) is when an analyst updates their earnings forecast downward compared with their previous forecast—often seen by the market as bad news.

Why analysts’ timing decisions matter for the stock market?

Analysts’ earnings forecasts can move stock prices—but when a forecast is released affects how strongly and how quickly the market reacts. This research shows that downward forecast revisions released after the market closes on weekdays tend to trigger a smaller immediate price drop than similar bad news released during trading hours or on weekends, suggesting investor attention is lower and the reaction is often delayed rather than eliminated.

Why this matters in practice

• For investors: After-hours bad news may not be fully priced in right away, so the impact can carry into the next trading session—affecting trading decisions and risk management.

• For firms and the market: Timing can change short-term volatility and the perceived “shock” at the open, influencing how smoothly information is incorporated into prices.

• For understanding analyst behavior: If bad news tends to appear in lower-attention windows, timing itself becomes a signal—helping readers interpret not only what was said, but why it was released then.

Why past research missed the full picture of non-trading hours?

Past research shows companies often time bad news for moments when the market is less attentive (market closed, Friday evenings, “busy” news days) to reduce immediate negative price reactions—or give investors more time to digest information.

But despite how influential analysts are in moving prices, there has been relatively limited evidence on how analysts time the release of research and forecast updates. Where studies do exist, they often use broad timing categories—“weekday vs weekend,” or “trading vs non-trading.”

That approach misses a key reality: not all non-trading hours are the same. Investor attention can be especially low during weekday evenings due to fatigue and reduced cognitive focus after a full trading day, while weekends can look different because investors have more time to recover and face fewer competing financial releases.

This helps explain inconsistent findings: what looks like a “weekend effect” may actually be driven by analysts being least willing to release bad news during trading hours, rather than being uniquely drawn to weekends.

A new lens: timing as a stock-price impact strategy

This study reframes analyst timing as a market-attention and price-impact problem. Because forecast cuts released during weekday after-hours tend to receive less immediate attention and trigger weaker immediate negative stock-price reactions, analysts have an opportunity to reduce the short-term market hit by choosing that window.

How the researchers became interested in the topic?

The idea began with a simple observation: many negative analyst forecast updates show up after the closing bell. That raised a natural question—if fewer investors are watching after hours, does the market react less immediately, and do analysts take that into account when releasing bad news?

The team also noticed a gap in the evidence. Prior work often groups time into broad buckets (trading vs non-trading; weekday vs weekend). But in reality, weekday after-hours and weekends are not the same for investor attention. Weekday after-hours can be particularly low-attention because people are off work, distracted, or mentally fatigued—so prices may adjust more slowly.

That combination—a real-world pattern in timing and a missing distinction in research—motivated the study to separate weekday after-hours from weekends and test two linked questions:

1. When does the stock market react most strongly to forecast cuts?

2. Do analysts systematically choose timing that reduces immediate price impact?

“In the stock market, bad news is not only about what is said — it’s also about when it’s released.”
— Xunzhuo（Tom）Xi

 

Three analyses behind the findings

Our study combines 2.36 million U.S. analyst EPS forecasts (1993–2022) with stock-price data to see whether timing changes market impact.

1. Market impact test: Stock prices react less immediately to forecast cuts released after the market closes on weekdays than to similar cuts released during trading hours.

2. Timing test: Analysts are more likely to release forecast cuts during weekday after-hours, consistent with choosing a window that reduces the short-term price drop.

3. Mechanism test: The pattern is strongest when forecasting is more uncertain (opaque firms, less firm-specific experience), and the weaker immediate reaction reflects delayed price adjustment, not lower-quality information.

Key takeaway: delayed reaction, not “less information”

One striking takeaway is that the after-hours effect is not because the market “ignores” bad news. Instead, the evidence suggests the stock market often processes after-hours forecast cuts more slowly.

In other words, when analysts cut forecasts after the bell on weekdays, the stock price tends to fall less immediately, but the adjustment shows up later—consistent with delayed attention rather than lower-quality information.

“We find that timing doesn’t remove the impact of bad news—it often delays it.”

Practical implications

• For investors and traders

  Pay attention not only to the forecast cut, but also when it is released. Forecast cuts announced after the market closes on weekdays may trigger a smaller immediate price drop, but the market may adjust more fully later. That means after-hours forecast news can carry risk into the next trading session—affecting overnight positions, opening volatility, and short-term strategies.

• For listed firms and investor relations

  Analyst revisions shape market expectations. If negative revisions tend to appear in low-attention windows, firms and IR teams should be prepared for delayed market digestion—questions and price pressure may emerge the next day rather than immediately. Monitoring after-hours analyst activity can help anticipate where sentiment is heading before the next open.

• For regulators and market transparency

  The results point to a systematic pattern: analysts are more likely to release forecast cuts in weekday after-hours, when immediate price reactions are typically weaker. This suggests timing can influence how quickly information is incorporated into prices. Separating weekday after-hours from weekends offers a clearer lens for evaluating information flow and investor attention.

A new mindset for understanding analyst forecast timing

Analyst forecast revisions are usually treated as “information events,” where the focus is mainly on what is said (the new earnings number). Our study suggests investors and researchers should pay equal attention to when the information is released, because timing can change the speed and strength of the market’s initial reaction.

Instead of a simple split (trading vs non-trading), non-trading time should be broken down into weekday after-hours vs weekends, because they behave differently in attention and immediate price impact. This “more granular clock” helps explain why earlier evidence can look mixed and clarifies that weekday after-hours is the window most consistent with muted immediate sell-offs and more frequent forecast cuts.

More broadly, modern markets are driven not only by fundamentals, but also by attention and information processing. A forecast cut released after the bell may not remove the impact of bad news—it may delay it—so interpreting analyst reports requires understanding both the content and the timing of disclosure.