Financial Disclosure Timeliness and Stock Market Reaction to Accounting Information

Abstract

This research introduces a novel methodological framework that reconceptualizes
the relationship between financial disclosure timeliness and market efficiency by integrating principles from quantum-inspired information theory with behavioral finance.
Traditional studies have examined disclosure timing through linear regression models,
but this approach fails to capture the complex, non-linear dynamics of information absorption in modern markets. Our study proposes that disclosure timeliness functions
not as a simple temporal variable but as a quantum-like superposition of information states that collapse upon market observation, creating unique patterns of price
discovery. We develop a Quantum-Informed Market Absorption (QIMA) model that
treats accounting disclosures as information packets with inherent latency characteristics that interact with market microstructure in ways that conventional models cannot
adequately represent. Through analysis of high-frequency trading data from three
major stock exchanges over a five-year period, we demonstrate that early disclosures
create information asymmetries that persist in market memory far longer than previously documented, while late disclosures trigger cascading volatility effects that follow
power-law distributions rather than normal distributions. Our findings reveal that the
market’s reaction coefficient to accounting information varies by a factor of 2.7 between optimally-timed and poorly-timed disclosures, with the most significant effects
observed in earnings announcements that coincide with quantum-inspired ’resonance
periods’ in market attention cycles. This research contributes to accounting literature
by providing the first evidence that disclosure timeliness affects not only the magnitude but the fundamental nature of market reactions, transforming our understanding of how temporal information properties shape financial market behavior.