Prior studies find that delayed earnings announcements tend to communicate unfavorable news, and investors react negatively when firms delay earnings announcements. However, these findings do not explain why investors discount delayed earnings, even after controlling for the earnings news, and why firms sometimes announce good news late. Motivated by theory from Trueman (1990) that attempts to explain these phenomena, we examine whether announcement delays indicate earnings management. We predict and find that good news firms with higher discretionary accruals are more likely to announce earnings late. Consistent with post fiscal year‐end activities driving announcement delays, we fail to find a relation between measures of real earnings management and late announcements. Using a last‐chance earnings management measure based on tax expense manipulation, we also predict and find strong evidence that good news firms engaging in last‐chance earnings management are more likely to delay earnings announcements. Consistent with Trueman's (1990) theory that earnings management explains why investors discount delayed earnings announcements, we find that, on average, earnings announcement returns are 1.4% lower for late announcers relying on last‐chance earnings management to report good news. Overall, our findings suggest that announcement delays provide information about not only the sign of the earnings news but also the potential for earnings management.

We examine whether investor inattention influences managers’ non-GAAP earnings disclosures. Hirshleifer and Teoh’s (2003) theoretical model predicts that managers are more likely to disclose upwardly-biased non-GAAP metrics when investors are inattentive. Employing a measure that captures exogenous variation in institutional investor inattention, we find that managers are more likely to provide non-GAAP disclosures, particularly those where non-GAAP earnings are greater than GAAP earnings, when inattention is high. Moreover, inattention is positively associated with the magnitude of non-GAAP exclusions, which suggests managers present better non-GAAP performance to inattentive investors. Consistent with managers exploiting investors’ limited attention, we find that stock prices respond more strongly to non-GAAP exclusions when investors are inattentive and that managers are more likely to respond to inattention with income increasing non-GAAP disclosures if they sell shares following the disclosure. Taken together, these findings suggest that managers respond opportunistically to inattentive institutions by disclosing aggressive non-GAAP earnings metrics.