Disney Earnings Error Prompts Investors to Sell

Walt Disney’s earnings results were accidentally distributed 15 minutes before the close of the New York Stock Exchange, which prompted a quick decline in stock price of more than four percent. According to the Wall Street Journal, a company official told analysts on a call that they “are investigating how this occurred.”

The Wrap and Business Insider reported receiving the release early.  The company announced a 6.7 percent profit decline.

Scott Mozarsky, EVP and chief commercial officer with PRNewswire, has been keeping up with the news. He says that mistakes are more likely now that IR groups have gotten smaller.

“The more responsibilities and the more tasks that are given to understaffed IR groups,” he told PRNewser, “increases the likelihood that there will be mistakes.”

PRNewswire is also vocal about the disclosure issue. Mozarsky says  that the website is a “key part of the disclosure strategy. But if you limit it to that, you set up an uneven playing field” and “give a major advantage to institutional investors.”

Yesterday’s snafu is an example that supports the current widespread method for earnings disclosure, he said.

“When companies move away from a system that works and more emphasis is placed on the internal group and they [don’t] have the bandwidth, there will be mistakes,” said Mozarsky. “Some investors will be well-placed to take advantage of that, some are not.”

[Image via Walt Disney website.]