An essay on reaction of stock prices to earnings announcements

2020 ◽  
Vol 9 (6) ◽  
pp. 165
Author(s):  
Iqbal Thonse Hawaldar
Keyword(s):  
Stock Prices ◽  
Earnings Announcements

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.

Regulation FD and the Financial Information Environment: Early Evidence

2003 ◽  
Vol 78 (1) ◽  
pp. 1-37 ◽  
Author(s):  
Frank Heflin ◽  
K. R. Subramanyam ◽  
Yuan Zhang
Keyword(s):  
Stock Prices ◽  
Earnings Announcements ◽  
Relevant Information ◽  
Financial Information ◽  
Earnings Forecast ◽  
Forecast Errors ◽  
Informational Efficiency ◽  
The Public ◽  
Fair Disclosure ◽  
Regulation Fd

On October 23, 2000, the SEC implemented Regulation FD (Fair Disclosure), which prohibits firms from privately disclosing value-relevant information to select securities markets professionals without simultaneously disclosing the same information to the public. We examine whether Regulation FD's prohibition of selective disclosure impairs the flow of financial information to the capital markets prior to earnings announcements. After implementation of FD, we find (1) improved informational efficiency of stock prices prior to earnings announcements, as evidenced by smaller deviations between pre-and post-announcement stock prices; (2) no reliable evidence of change in analysts' earnings forecast errors or dispersion; and (3) a substantial increase in the volume of firms' voluntary, forward-looking, earnings-related disclosures. Overall, we find no evidence Regulation FD impaired the information available to investors prior to earnings announcements, and some of our evidence is consistent with improvement.

scholarly journals Earnings shocks: An event study on Boursa Kuwait

2021 ◽  
Vol 10 (3) ◽  
pp. 363-368
Author(s):  
Saad B F M AlHajraf
Keyword(s):  
Stock Prices ◽  
Important Implication ◽  
Stock Exchange ◽  
Earnings Announcements ◽  
Abnormal Returns ◽  
Rate Of Return ◽  
Study Results ◽  
Kuwait Stock Exchange ◽  
Before And After ◽  
Abnormal Rate

This study investigates the effects of earnings announcements on stock prices in Boursa Kuwait, formerly known as the Kuwait Stock Exchange (KSE).  The data spans the period 2018–2020, and both positive and negative earnings announcements are employed as shock events and their effects assessed. The study results show that there is a statistically abnormal rate of return before and after the earnings announcements and that most abnormal returns are just after the earnings announcement.  This most likely indicates that Boursa Kuwait is a semi-strong efficient stock market.  One important implication is an indication that insider-related trading might be absent in Boursa Kuwait. 

Short-Selling and Information Arrival around Earnings Announcements: Evidence from Regulation SHO

2021 ◽  
Author(s):  
Greg Clinch ◽  
Wei Li
Keyword(s):  
Stock Prices ◽  
Earnings Announcements ◽  
Public Information ◽  
Short Selling ◽  
Price Informativeness ◽  
The Public ◽  
Short Sellers ◽  
Information Release ◽  
Negative News ◽  
Shed Light

Short sellers assist in impounding negative news more quickly into stock prices and improve price informativeness. However, there is a lack of consistent evidence about whether short sellers trade predominantly in anticipation of, or in response to, a public information release. To shed light on this question, we exploit Reg SHO, which reduced the constraints faced by short sellers for a subsample of U.S. firms, to examine price informativeness before, during and after earnings announcements. We show that relative to control firms, pilot firms have greater (less) price informativeness before (during) earnings announcements, suggesting that short sellers trade in anticipation of public earnings news, rather than in response to the public news.

scholarly journals Do Investors See through Mistakes in Reported Earnings?

2011 ◽  
Vol 46 (6) ◽  
pp. 1917-1946 ◽  
Author(s):  
Katsiaryna Salavei Bardos ◽  
Joseph Golec ◽  
John P. Harding
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Annual Report ◽  
Earnings Announcements ◽  
Announcement Effect ◽  
Earnings Restatements ◽  
Earnings Surprise ◽  
Reported Earnings

AbstractThis study investigates whether investors see through materially misstated earnings, and whether they anticipate earnings restatements. For firms that restate at least one annual report, we find that investors are misled by mistakes in reported earnings at the time of initial earnings announcements. Investors react positively to the component of the favorable earnings surprise that will subsequently be restated, and they attach the same valuation to it as to the true earnings surprise. We also find that investors anticipate the subsequent downward restatements and start marking stock prices down several months before a restatement announcement, so that the full impact of a restatement is about three times as large as the restatement announcement effect. Indeed, we show that investors punish restating firms because the stock price gains that shareholders enjoy when firms initially announce overstated earnings are more than reversed by the time of the restatement announcement.

Sign in / Sign up

Export Citation Format

Share Document