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The purpose of this paper is to provide the first empirical assessment of the persistence and predictability of earnings within the Georgian private sector entities.

The sample comprises of all the Georgian private sector entities who, according to the new Law of Georgia on Accounting, Reporting and Auditing (2016), had to submit their audited financial statements by 1 October 2018. Financial data has been officially withdrawn from the Ministry of Finance of Georgia and the descriptive data has been obtained by the use of Link Klipper and ScrapeStorm tools through the official “Reportal” website. The final sample consists of 450 large Georgian private sector entities. The study uses a simple, one-year-lagged earnings auto-regression to detect the persistence and predictability within the next series of earnings. A weighted least square method has been used as a statistical procedure.

The results reveal that current earnings persist within the next year’s series of earnings at less than 25%, while the reliance on current year’s earnings enables us to predict the next year’s earnings only with a chance of 20%. Further analysis has witnessed that cash flows from operations persist at less than 40% and are able of predicting the next year’s cash flows at below 35%. Overall, the properties of earnings and cash flows within the private sector of Georgia are of relatively poor quality, with the latter demonstrating higher properties compared to earnings.

The general finding on a relatively low property of earnings raises potential investors and creditors’ awareness on the valuation-usefulness of provided financial information within the private sector of Georgia. The fact that earnings are significantly less persistent and predictable compared to cash flows from operations, hints on accruals’ problematic functioning. The results presented in this paper should be of interest to a local regulator (SARAS), charged with the responsibility of successfully running a currently ongoing accounting reform of Georgia.

This is the first study that examines the persistence and predictability of earnings and cash flows from operations among the private sector entities of Georgia.

This study aims to examine the timing of corporate disclosure in the context of Georgia, an emerging market where a recent reform of corporate financial transparency mandated about 80,000 private sector entities to publicly disclose their annual financial statements.

The main analysis covers more than 4,000 large, medium, small and micro private sector entities, for which the data is obtained from the Ministry of Finance of Georgia. This paper builds an empirical model of logit/probit regression, with industry fixed and random effects to investigate the drivers of the corporate disclosure timing.

Findings suggest that the mean reporting time lag is 279 days after the fiscal year-end, that is nine days after the statutory deadline. Almost one-third (30%) of the entities miss the nine-month statutory deadline, while the timely filers almost unexceptionally file immediately before the deadline. Multivariate tests reveal that voluntarily filing entities completed the process significantly faster than those mandated to do so; audited financial statements take more time to be filed, whereas those with unqualified audit opinion or audited by large/international audit firms are filed faster than their counterparts. The author concludes that despite the overall high filing rates, the timing of corporate disclosure is not (yet) efficiently enforced in practice (but is progressing over time), whereas regulatory incentives prevail over market incentives among the timely filers.

To the best of the author’s knowledge, this is the first study that explores corporate disclosure timing incentives in the context of Georgia. This study extends prior literature on the timing of financial information from an emerging country’s private sector perspective, with juxtaposed market and regulatory incentives.