Variation in the Stock Market Response to Earnings Announcements Associated with the Reporting Firm's Position in Its Industry's Earnings Release Queue PDF Download

Author: Robert G. Rambo
Publisher:
ISBN:
Category : Corporate profits
Languages : en
Pages : 192

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Author:
Publisher:
ISBN:
Category : Dissertation abstracts
Languages : en
Pages : 800

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Author:
Publisher:
ISBN:
Category : Dissertations, Academic
Languages : en
Pages : 644

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Author: Ki Choong Han
Publisher:
ISBN:
Category : Corporate profits
Languages : en
Pages : 318

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Author: Yann-ching Tsai
Publisher:
ISBN:
Category : Stocks
Languages : en
Pages : 174

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Author: Jeffrey T. Doyle
Publisher:
ISBN:
Category :
Languages : en
Pages : 44

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Beginning with Patell and Wolfson (1982), several papers have documented that earnings announcements made after the market closes and/or on Fridays tend to contain worse earnings news than those made at other times. One hypothesis is that opportunistic managers release earnings at these times of decreased media attention to quot;hidequot; their bad news and reduce the associated market penalty. Using firm-level tests that focus on only those firms that switch their disclosure timing (rather than consistently report at the same time), we find no evidence that managers opportunistically report worse news after the market closes or on Fridays. We then explore other determinants of the timing decision, including the more benign hypothesis that managers with worse earnings news release earnings after the market closes to more broadly disseminate the information. Consistent with desiring more time for the market to assimilate the announcement, we find some evidence that more complex firms tend to announce earnings after the market closes. We also find that these announcements are associated with greater abnormal volume, possibly indicating a successful dissemination strategy. We also find that the corporate headquarters location, the size of the firm, the number of analysts covering the firm, and industry membership are all significant explanatory variables for the timing decision. Overall, our findings are consistent with efficient capital markets that are effective at monitoring new information, regardless of the time of the announcement.

Author: Gregory S. Miller
Publisher:
ISBN:
Category :
Languages : en
Pages : 49

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This paper identifies cross-sectional factors that motivate the disclosure of forward-looking earnings information and documents that these disclosures impact market prices by quot;pulling forwardquot; future earnings information. We examine a set of firms facing poor current earnings performance, undervaluation concerns, investor neglect and extreme pessimism and find significant cross-sectional variation regarding whether these firms provide forward-looking earnings information to correct market misperceptions in advance of the earnings announcement. Consistent with existing theory, firms with stronger and more persistent earnings news are more likely to provide forward-looking disclosures during the turnaround period. Moreover, we find that firms operating in high litigation industries, possessing strong institutional ownership, having greater stock option-based compensation and facing larger non-equity stakeholders are more likely to provide disclosures. Alternatively, we find evidence that the use of alternative financial signaling mechanisms (share repurchases and dividend increases) lowers the probability that managers will make forward-looking disclosures. Market-based tests indicate that the disclosed information is value-relevant. The market responds in a significantly positive manner to forecasts of earnings (i.e., forward-looking statements provided outside of earnings announcements) as well as to forward-looking statements bundled in current earnings announcements (after controlling for the current period's earnings information). Furthermore, these responses are positively correlated with future seasonally-adjusted changes in earnings, indicating the disclosures are effective in pulling forward future mandatory information. Finally, the market reaction to the announcements of previously preempted earnings is less than that of unpreempted earnings, providing additional evidence that the disclosures are effectively pulling-forward the eventual mandatory earnings information.

Author: Qin Lei
Publisher:
ISBN:
Category :
Languages : en
Pages : 43

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Using a broad sample of earnings announcements, we find that option call and put implied volatilities become increasingly misaligned as the earnings announcement dates (EAD) get closer. The percentage deviation between call and put implied volatilities increases monotonically in the one-month period leading up to the EAD. In addition, the direction of these deviations is consistent with the announcement returns of such earnings releases. More importantly, by adapting the earnings response coefficient (ERC) framework, we find that pre-earnings option trading actually increases rather than decreases the stock market response to the earnings announcements. In a cross section of earnings announcements, we find stronger stock market reaction from earnings announcements with greater abnormal implied volatility spread immediately before the EAD. By relating option volume to investor attention, we find higher pre-announcement option volume is associated with increased stock market response. Overall, our findings suggest that pre-earnings option trading helps alleviate the stock market under-reaction to earnings announcements and make the stock market response more complete.

Author: VICTOR L. BERNARD
Publisher:
ISBN:
Category :
Languages : en
Pages : 44

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Author: World Bank
Publisher: World Bank Publications
ISBN: 1464814414
Category : Business & Economics
Languages : en
Pages : 241

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Seventeen in a series of annual reports comparing business regulation in 190 economies, Doing Business 2020 measures aspects of regulation affecting 10 areas of everyday business activity.