Stock Price Behavior Associated with Post-1974–75 LIFO Adoptions Announced at Alternative Disclosure Times

1996 ◽  
Vol 11 (4) ◽  
pp. 535-564 ◽  
Author(s):  
Morton Pincus ◽  
Charles E. Wasley
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Earnings Announcements ◽  
Market Response ◽  
Price Behavior ◽  
Positive Information ◽  
Earnings Announcement ◽  
Earnings Growth ◽  
Adoption Decision ◽  
Annual Earnings

We examine the behavior of stock prices at the time of post-1974–75 LIFO adoption announcements. We exploit recent theoretical and empirical developments in the LIFO adoption literature in an attempt to resolve some of the mixed findings in Hand (1993). We study LIFO adoptions announced prior to as well as at the time of annual earnings announcements. Previous research has mostly centered on 1974–75 adoptions made at the time of annual earnings announcements. Our study of LIFO adoptions announced prior to annual earnings announcement dates enables us to provide evidence on whether the early announcement of a LIFO adoption is used by firms to signal positive information about earnings growth. Collectively, our results suggest that in explaining the market response to LIFO adoption announcements, extant models of the LIFO adoption decision do not fully capture the richness of differing inflationary environments or of alternative disclosure times.

scholarly journals Managerial ability, tone of earnings announcements, and market reaction

2017 ◽  
Vol 25 (4) ◽  
pp. 454-471 ◽  
Author(s):  
Yan Luo ◽  
Linying Zhou
Keyword(s):  
Significant Role ◽  
Stock Price ◽  
Design Methodology ◽  
Earnings Announcements ◽  
Management Teams ◽  
Market Response ◽  
Managerial Ability ◽  
Earnings Announcement ◽  
Content Type ◽  
Stock Price Reaction

Purpose The purpose of this paper is to examine the effect of managerial ability on the tone of earnings announcements and on the market response to the tone. Design/methodology/approach This study constructs a model of the determinants of earnings announcement tone in order to examine whether managerial ability plays a significant role in determining earnings announcement tone. Further, to test whether the market response to the tone of earnings announcements is affected by managerial ability, this study also examines the interactive term between earnings announcement tone and managerial ability. The tone of earnings announcements is measured using the spread in the proportion of positive and negative words. Managerial ability is measured using the managerial ability rank developed by Demerjian et al. (2012). Findings More able management teams use a more positive tone in their earnings announcements. Stock markets have more pronounced positive reactions to positive tones in the earnings announcements issued by companies with more able management teams. Originality/value This study identifies managerial ability as a previously unrecognized determinant of tone in earnings announcements and of the stock price reaction to earnings announcements.

scholarly journals Measuring The Usefulness Of Information For Investors Inferences: The Case Of Quarterly Earnings Announcements

2010 ◽  
Vol 8 (7) ◽  
Author(s):  
C. Catherine Chiang ◽  
Yaw M. Mensah
Keyword(s):  
Financial Performance ◽  
Stock Price ◽  
Value Of Information ◽  
Earnings Announcements ◽  
New Method ◽  
Rates Of Return ◽  
Earnings Announcement ◽  
Quarterly Earnings ◽  
Other Information

In this paper, we propose a new method for assessing the usefulness of information, its inferential value. In the context of accounting and finance, we define the inferential value of information about a firm as how efficaciously the information enables investors to draw correct inferences regarding its future financial performance. On the basis of this definition, we develop a stylized model to measure the proximity of a firm’s future realized rates of return to the estimated rates of return implied by its current stock price. We then use the new measure to test the hypothesis that quarterly earnings announcements have a higher inferential value than other information arriving during interim (non-earnings announcement) periods. Our empirical findings suggest that investors are able to make more informative inferences about a firm’s future profitability based on quarterly earnings announcement than based on information available during interim periods. However, our findings also suggest that, in general, investors do not correctly anticipate future losses. Finally, we find that earnings announcements are as important in anticipating future profitability for larger firms as they are for smaller firms.

scholarly journals Does Macroeconomic Indicators Influence Stock Price Behavior? Evidence from Nigerian Stock Market

2019 ◽  
Vol 6 (2) ◽  
pp. 26
Author(s):  
Peter Ego Ayunku
Keyword(s):  
Stock Market ◽  
Significant Influence ◽  
Stock Prices ◽  
Stock Price ◽  
Time Series Data ◽  
Unit Root Test ◽  
Series Data ◽  
Price Behavior ◽  
Market Growth ◽  
Integration Test

This paper investigate whether macroeconomics indicators influences stock price behavior in Nigerian stock market, using an annual time series data spanning from 1985-2015. The study employed some econometric tools such as Augmented Dicker Fuller (ADF) Unit Root test, Johansen’s co integration test, Vector Error Correction Model (VECM) to analyze the variables of interest. The study found out that Money Supply (MS) has an inverse but statistically significant  influence on stock prices in Nigerian stock market also Treasury Bill Rate (TBR) has an inverse and statistically insignificant influence on stock market prices. While on the other hand, Market Capitalization (MCAP) has a positive and statistically significant influence on stock prices while Exchange Rate (EXR) has positive but statistically insignificant relationship with stock prices in the Nigerian Stock Market. In view of the above, the study recommends amongst others that monetary authorities should try as much as possible to implement sound macroeconomic policies that would enhance stock market growth and development in Nigeria. 

Effect of quarterly earnings announcement under different market conditions

2014 ◽  
Vol 6 (2) ◽  
pp. 128-154 ◽  
Author(s):  
Santu Das ◽  
Jamini Kanta Pattanayak ◽  
Pramod Pathak
Keyword(s):  
Event Study ◽  
Stock Price ◽  
Earnings Announcements ◽  
Market Condition ◽  
Market Conditions ◽  
Price Movement ◽  
Earnings Announcement ◽  
Content Type ◽  
Quarterly Earnings ◽  
The Impact

Purpose – The main purpose of this research study is to investigate the impact of quarterly earnings announcements on stock price movement of the firms constituting the SENSEX under two different market conditions – booming followed by recessionary. Analysis of price effect of quarterly earnings announcements during the five-year period prior to trading suspension, which is also characterized by a booming market condition have been made. Similar analysis during the five-year period following the trading suspension and marked by recessionary market condition has also been carried out side by side. Design/methodology/approach – Event study methodology using daily returns and market model has been used for the purpose of analyzing the quarterly earnings announcement effects on the security prices of the firms. A sign test has also been used along with the event study. Findings – The study reveals that quarterly earnings announcement does not have statistically significant effect on stock returns during the booming as well as the recessionary market conditions. The impact of quarterly earnings announcements on stock price movement of firms constituting the SENSEX has been similar for both periods undertaken in the study. Research limitations/implications – The study has been undertaken using the firms listed in BSE SENSEX. The effect of the quarterly earnings announcement with reference to firms listed in other indices, if covered, may provide different sets of results. Originality/value – The paper identifies the informational value of quarterly earnings announcement of BSE-SENSEX.

The stock market’s reaction to accounting information: the cases of Chile and Peru

2016 ◽  
Vol 6 (3) ◽  
pp. 254-268 ◽  
Author(s):  
Mauricio Melgarejo ◽  
Eduardo Montiel ◽  
Luis Sanz
Keyword(s):  
Latin American ◽  
Stock Prices ◽  
Stock Markets ◽  
Stock Price ◽  
Small Firms ◽  
Accounting Information ◽  
Abnormal Returns ◽  
Earnings Announcement ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to analyze the stock price and volume reactions around firms’ earnings announcement dates in two Latin American stock markets: Chile and Peru. Design/methodology/approach – This study uses multivariate regression analysis to determine the impact of accounting information on stock prices and volume traded around the firms’ earnings announcement dates. Findings – The authors find that quarterly earnings surprises explain stock abnormal returns and abnormal trading volumes around the earnings announcement dates in the Santiago (Chile) and Lima (Peru) stock exchanges. The authors also find that these two effects are driven by small firms. Originality/value – This is one of the first articles to study the price and volume reactions to accounting information in Latin American stock markets.

Stock Price Modeling: Separation of Trend and Fluctuations, and Implications

2015 ◽  
Vol 18 (04) ◽  
pp. 1550027 ◽  
Author(s):  
B. D. Craven ◽  
Sardar M. N. Islam
Keyword(s):  
Behavioral Finance ◽  
Positive Feedback ◽  
Stock Prices ◽  
Stock Price ◽  
Additive Model ◽  
Logarithmic Scale ◽  
Price Behavior ◽  
Interaction Terms ◽  
Wide Range ◽  
Short Time

A series of stock prices typically shows a large trend and smaller fluctuations. These two parts are often studied together, as if parts of a single process; but they appear to be separately caused. In this paper, the two parts are analyzed separately, so that one does not distort the other, and some spurious interaction terms are avoided. This contributes a model, in which a wide range of features of stock price behavior are identified. With logarithms of stock prices, the two parts become of more comparable size. This is found to lead to a simpler additive model. On a logarithmic scale, the stock prices show the trend as a straight line (which can be extrapolated), with added fluctuations filling a narrow band. The trend and fluctuations are thus separated. The trend appears to be largely generated by a positive feedback process, describing investor behavior. The width of the fluctuation band does not grow with time, so positive feedback is not its cause. The movement of stock prices can be understood by analyzing the trend and fluctuations as separate processes; the latter considered as a stationary stochastic process with a scale factor. This analysis is applied to a historical dataset [Formula: see text] index of daily prices from February 1928). Here, the fluctuations are autocorrelated over short time intervals; there is little structure, except for market crash periods, when variability increases. The slope of the trend showed some jumps, not predictable from price history. This approach to modeling describes many aspects of stock price behavior, which are usually discussed in behavioral finance.

scholarly journals A Note On The Effect Of M&A Announcements On Stock Price Behavior And Financial Performance Changes: The Case Of Arab Malaysian Bank Berhad And Hong Leong Bank Berhad

2011 ◽  
Vol 7 (9) ◽  
Author(s):  
Carl B. McGowan, Jr. ◽  
Zunaidah Sulong
Keyword(s):  
Financial Performance ◽  
Event Study ◽  
Stock Price ◽  
Abnormal Returns ◽  
Market Model ◽  
Price Behavior ◽  
Positive Information ◽  
Announcement Date

This study examines the effect of M&A completion announcements on the stock price behavior for two anchor banks in Malaysia: Hong Leong Bank Berhad and Arab Malaysian Bank Berhad. The analysis uses the event study technique, the Nave Model, a model that is based on Market Model with constrained ? = 0 and ? = 1 to compute the abnormal returns surrounding the M&A completion announcement date and to evaluate the effect of M&A completion announcement on the banks return. The results from event study show that the M&A completion announcements are treated as positive information by the market.

scholarly journals Daily Stock Price Behavior of Commercial Banks in Nepal

2007 ◽  
Vol 3 (1) ◽  
pp. 100-110 ◽  
Author(s):  
Keshar J. Baral ◽  
Surya Kumar Shrestha
Keyword(s):  
Stock Prices ◽  
Commercial Banks ◽  
Stock Price ◽  
Serial Correlation ◽  
Fiscal Year ◽  
Price Behavior ◽  
Data Set ◽  
Business Studies ◽  
Random Walk Hypothesis ◽  
The Past

Using the data set on daily stock prices during the fiscal year 2005/06 (July 16, 2005 through July 16, 2006), this paper attempts to analyze the stock price behavior of commercial banks in Nepalese markets. The results of serial correlation and run tests conclude that the proposition of Random Walk Hypothesis (RWH) in Nepalese stock markets does not hold true. This conclusion corroborates with the conclusions of the past studies carried out in Nepalese context.Journal of Nepalese Business Studies 2006/III/1 pp. 100-110

scholarly journals The impact of earnings-announcement timing on technical analysis signal: The case of Indonesia

2015 ◽  
Vol 18 (2) ◽  
pp. 179
Author(s):  
Dedhy Sulistiawan
Keyword(s):  
Stock Market ◽  
Emerging Market ◽  
Earnings Announcements ◽  
Information Leakage ◽  
Technical Analysis ◽  
Earnings Announcement ◽  
Price Reaction ◽  
Fundamental Information ◽  
Annual Earnings ◽  
The Impact

This study discusses technical analysis signal and earnings-announcements timing. Technical analysis signal is used to capture price reaction around earnings announcement dates. Technical analysis is selected because it is potential for competing information as fundamental information in emerging market, especially in Indonesian stock market. The longer reporting lag will result in a tendency of bigger information leakage which makes price reaction before announcements stronger. That reaction produces a reliable technical analysis signal. By using Indonesian stock market data, the results show that (1) technical analysis signal generates bigger (lower) return for late (earlier) reporting, and (2) reporting lag positively affects the performance of technical analysis signal that emerge before annual earnings announcements. These findings indicate a tendency of bigger information leakage for companies that delay earnings announcements. It contributes to building a bridge between technical analysis and earnings-announcement timing studies.

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