Abstract
In this article I examine the response of investors and analysts of nonannouncing firms to the earnings report of the first announcers in the industry. The error in the earnings forecast of the first announcer is found to be informative about the errors in the contemporaneous earnings forecasts of subsequent announcers in the industry. However, investors and analysts do not appear to fully incorporate the information from the first announcers' news in their revised earnings expectations for subsequent announcers. This apparent underreaction to the first announcers' news leads to predictable stock returns for subsequent announcers in the days following the first announcement. Results of this study can be seen as further evidence of investor and analyst underreaction to publicly available information.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1351-1376 |
| Number of pages | 26 |
| Journal | Journal of Accounting Research |
| Volume | 40 |
| Issue number | 5 |
| DOIs | |
| State | Published - Jan 1 2002 |
| Externally published | Yes |
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ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
Cite this
Investor and analyst reactions to earnings announcements of related firms : An empirical analysis. / Ramnath, Sundaresh.
In: Journal of Accounting Research, Vol. 40, No. 5, 01.01.2002, p. 1351-1376.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Investor and analyst reactions to earnings announcements of related firms
T2 - An empirical analysis
AU - Ramnath, Sundaresh
PY - 2002/1/1
Y1 - 2002/1/1
N2 - In this article I examine the response of investors and analysts of nonannouncing firms to the earnings report of the first announcers in the industry. The error in the earnings forecast of the first announcer is found to be informative about the errors in the contemporaneous earnings forecasts of subsequent announcers in the industry. However, investors and analysts do not appear to fully incorporate the information from the first announcers' news in their revised earnings expectations for subsequent announcers. This apparent underreaction to the first announcers' news leads to predictable stock returns for subsequent announcers in the days following the first announcement. Results of this study can be seen as further evidence of investor and analyst underreaction to publicly available information.
AB - In this article I examine the response of investors and analysts of nonannouncing firms to the earnings report of the first announcers in the industry. The error in the earnings forecast of the first announcer is found to be informative about the errors in the contemporaneous earnings forecasts of subsequent announcers in the industry. However, investors and analysts do not appear to fully incorporate the information from the first announcers' news in their revised earnings expectations for subsequent announcers. This apparent underreaction to the first announcers' news leads to predictable stock returns for subsequent announcers in the days following the first announcement. Results of this study can be seen as further evidence of investor and analyst underreaction to publicly available information.
UR - http://www.scopus.com/inward/record.url?scp=0036913732&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0036913732&partnerID=8YFLogxK
U2 - 10.1111/1475-679X.t01-1-00057
DO - 10.1111/1475-679X.t01-1-00057
M3 - Article
AN - SCOPUS:0036913732
VL - 40
SP - 1351
EP - 1376
JO - Journal of Accounting Research
JF - Journal of Accounting Research
SN - 0021-8456
IS - 5
ER -