We tested six SEC red flags. Only one predicted returns: filing late
Companies that told the SEC their annual or quarterly report would be late trailed matched peers by 9.3% over the next year. Auditor changes, restatements, impairments, listing notices and defaults showed no reliable effect.
- Late filers vs matched peers, 1 year
- −9.3%
- After 3 months
- −4.5%
- After 6 months
- −6.4%
- Beat their peers
- 39%
- Other flags with an effect
- 0 of 5
What we found
US companies worth $300M or more that filed an NT 10-K or NT 10-Q (a notice that a report will be late) trailed matched peers by 4.5% after three months, 6.4% after six and 9.3% after twelve (t = −3.6 to −3.8). Only 39% beat their peers. That is 595 filings from 2016 to 2025.
The other five flags (auditor changes, restatements, impairments, exchange listing notices and debt defaults) showed no reliable effect. Late filing is the only one that survives a Bonferroni correction for the 24 tests (six flags at four horizons).
The full results
Only the late filing clears the bar for six flags tested.
| Group | Events | 1 month | 3 months | 6 months | 12 months | t (12 mo) | Beat peers |
|---|---|---|---|---|---|---|---|
| Late filing notice | 595 | −1.3% | −4.5% | −6.4% | −9.3% | −3.8 | 39% |
| Auditor change | 573 | +0.3% | −0.1% | −0.5% | −3.9% | −1.6 | 41% |
| Restated financials | 168 | +0.4% | +3.7% | +0.3% | −1.6% | −0.4 | 42% |
| Material impairment | 262 | −0.2% | −0.4% | −0.3% | −1.8% | −0.6 | 44% |
| Exchange listing notice | 404 | +0.2% | +2.9% | +2.1% | +8.1% | +1.8 | 45% |
| Debt default or acceleration | 160 | +0.5% | +4.4% | +7.2% | +6.7% | +1.0 | 48% |
24 tests (6 flags × 4 horizons): with a Bonferroni correction a result needs |t| above about 3.1. Only late filings pass, at 3, 6 and 12 months.
| Group | Events | 1 month | 3 months | 6 months | 12 months | t (12 mo) | Beat peers |
|---|---|---|---|---|---|---|---|
| Late filing notice | 316 | −0.7% | −4.4% | −5.9% | −6.5% | −2.5 | 40% |
| Auditor change | 280 | +0.6% | +1.9% | +1.4% | +0.8% | +0.2 | 46% |
| Restated financials | 89 | −0.8% | +1.1% | −0.2% | −6.4% | −1.6 | 39% |
| Material impairment | 229 | −0.5% | −1.2% | −1.6% | −2.8% | −0.9 | 44% |
| Exchange listing notice | 227 | −1.4% | −0.2% | −0.3% | +2.4% | +0.6 | 47% |
| Debt default or acceleration | 137 | +0.7% | +2.4% | +3.7% | +4.8% | +0.8 | 48% |
Why filing late matters
A company files an NT 10-K or NT 10-Q when it can’t finish its annual or quarterly report on time. The reasons range from an acquisition to an auditor dispute or an accounting problem still being uncovered. The notice comes before the details, and the market takes months to price what follows.
The other flags are announced with their substance: a restatement or impairment comes with the numbers, so the price adjusts at once. A late filing is a question still open.
How to use it
Check the Filings & Red Flags tab of any stock you own: it lists late-filing notices, restatements, auditor changes, going-concern doubts, material weaknesses and listing notices, each with the filing behind it. Pro screens can exclude companies with a late filing in the past year, and watchlist digests report new red flags as they are filed.
How it was measured
- Flags from 8-K item codes and late-filing notices, the same ones each stock’s Filings & Red Flags tab shows.
- Bought at the close the day after the filing; peers in the same size decile and prior-six-month-return quintile.
- Returns winsorised at 1% and 99%; Newey–West t-statistics.
Caveats
- Survivors only, which makes the shortfall an understatement: late filers that went on to delist are missing.
- Below $300M the data is dominated by microcap outliers, which is why that size floor is used.
Questions
- What is an NT 10-K?
- A notice to the SEC that a company can’t file its annual report (10-K) on time. An NT 10-Q does the same for a quarterly report.
- What happens to a stock after a late filing?
- At US companies worth $300M or more, late filers trailed peers of the same size and trend by 4.5% after three months, 6.4% after six and 9.3% after twelve (595 filings, 2016–2025).
- Do auditor changes or restatements predict returns?
- Not reliably. Auditor changes, restatements, impairments, exchange listing notices and debt defaults showed no effect that survives a correction for testing six flags.
More research
- Market factInvesting all at once beat spreading it over a year 77% of the time
- Market factBuying at an all-time high did no worse than buying any other month
- Market factWe tested 24 Supertrend settings. None beat holding the S&P 500
Historical analysis. Past performance does not guarantee future results. Not investment advice. Published Nov 2026. Data: Prices to Sep 25, 2026.