Delayed informed trades and opinion divergence: Evidence from earnings releases

2020 ◽  
Author(s):  
Tao Chen
Keyword(s):  
Earnings Releases ◽  
Opinion Divergence

News at the Bell and a Level Playing Field

2022 ◽  
Author(s):  
Danqi Hu ◽  
Andrew Stephan
Keyword(s):  
Stock Exchange ◽  
Institutional Ownership ◽  
Informed Trading ◽  
Stock Exchanges ◽  
Level Playing Field ◽  
Playing Field ◽  
Earnings Releases ◽  
Do So

We provide initial evidence that stock exchange procedures around closing auctions advantage speed traders at the expense of auction participants. We show that, on Nasdaq and NYSE Arca, 4:00 pm earnings releases result in informed trading in the continuous regular-hour session in the short window between 4:00 pm and the closing auction; this trading subsequently moves closing prices in the direction of the earnings news. The ability of speed traders to submit 4:00 pm-news orders to the auction through the continuous session earns them up to 1.5% profit and creates an unlevel playing field because most auction participants are not allowed to cancel their orders. When stock exchanges recommended that firms delay disclosures until after the market close, those with higher institutional ownership were more likely to do so voluntarily. Our study has implications regarding the timing of information releases and the design of the closing process.

Bringing order to non-GAAP financial measures: SEC sues to enforce “equal-or-greater-prominence” requirement

2019 ◽  
Vol 20 (4) ◽  
pp. 51-57
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Financial Measures ◽  
Generally Accepted Accounting Principles ◽  
Enforcement Action ◽  
Accounting Principles ◽  
Depth Analysis ◽  
The Us ◽  
Earnings Releases

Purpose This article examines the first action by the US Securities and Exchange Commission to enforce the “equal-or-greater-prominence” requirement of its rules governing the presentation by SEC-reporting companies, in their SEC filings and earnings releases, of financial measures not prepared in accordance with generally accepted accounting principles (GAAP). Design/methodology/approach This article provides an in-depth analysis of the equal-or-greater-prominence rule and the SEC’s enforcement posture in the context of the SEC’s concern that some companies present non-GAAP financial measures in a manner that inappropriately gives the non-GAAP measures greater authority than the comparable GAAP financial measures. Findings Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, investors could be misled about the company’s GAAP results by disclosures that unduly highlight non-GAAP measures. The SEC’s enforcement action signals a focus on the manner in which companies present non-GAAP financial measures as well as on how they calculate the measures. Originality/value This article provides expert guidance on a major SEC disclosure requirement from an experienced securities lawyer.

Investor opinion divergence and post-repurchase announcement stock price drift

2015 ◽  
Vol 47 (22) ◽  
pp. 2293-2306
Author(s):  
Gow-Cheng Huang ◽  
Kartono Liano ◽  
Ming-Shiun Pan
Keyword(s):  
Stock Price ◽  
Opinion Divergence

scholarly journals The framing and reframing of corporate financial results

2016 ◽  
Vol 21 (1) ◽  
pp. 103-119 ◽  
Author(s):  
Julian Rosenkranz ◽  
Irene Pollach
Keyword(s):  
Press Releases ◽  
Content Type ◽  
Financial News ◽  
Financial Communication ◽  
News Agencies ◽  
Corporate Earnings ◽  
Positive Statements ◽  
Earnings Releases ◽  
Earnings Press Releases

Purpose – News agencies are important stakeholders for large organizations, since the news they distribute will be adopted by other news outlets, which influence public opinion and hence corporate reputation. The purpose of this paper is to advance the understanding of how corporate earnings press releases are transformed into financial news by investigating whether the frames introduced by companies are adopted or reframed by news agencies. Design/methodology/approach – A content analysis of framing techniques in corporate earnings releases and their corresponding news-agency releases was performed, focussing on the financial figures and benchmarks presented, performance attributions, and the tonality of the texts. Findings – The findings suggest that news agencies reframe earnings releases at the textual-pragmatic level by reducing their length, using fewer financial figures, and changing the position of these figures in the texts; they increase transparency by avoiding adjusted financial figures, qualifying figures, and adding analyst assessments; and they change the tonality by down-toning positive statements and highlighting negative aspects. Originality/value – This paper makes a contribution to the field of corporate financial communication, which has not shed much light on the transformation of earnings press releases into financial news. In addition, this paper contributes to the stream of research on journalistic transformations of corporate press releases in general, which has ignored the influential role of news agencies as both manufacturers and wholesalers of news.

Firm characteristics associated with concurrent disclosure of GAAP-compliant financial statements with earnings announcements

2018 ◽  
Vol 26 (3) ◽  
pp. 365-381 ◽  
Author(s):  
Thomas D’Angelo ◽  
Samir El-Gazzar ◽  
Rudolph A. Jacob
Keyword(s):  
Financial Reporting ◽  
Voluntary Disclosure ◽  
Earnings Announcements ◽  
Balance Sheet ◽  
Control Sample ◽  
Financial Statements ◽  
Cash Flows ◽  
Content Type ◽  
Quarterly Earnings ◽  
Earnings Releases

Purpose This paper aims to examine the characteristics of firms that voluntary disclose generally accepted accounting principals (GAAP)-compliant statements of income, statement of cash flows (SCF) and balance sheet (BS) concurrently with quarterly earnings releases. Cardinal motivation of the paper stems from the increasing demand over the past decade by professional analysts and the Securities and Exchange Commission for concurrent disclosure of GAAP-compliant financial statements with earnings’ announcements. Design/methodology/approach Using hand-collected archival data, a random sample was identified as disclosing GAAP-compliant SCF and BS with their quarterly earnings releases compared to a control sample identified as non-GAAP-compliant disclosing firms during the 36-month period of 2009-2011, and several hypotheses are tested to determine managements’ incentives to disclose GAAP-compliant versus non-GAAP financials with their earnings releases. Findings The results in this paper suggest that debt financing, corporate governance, operating performance, earnings volatility, industry membership (such as technology and more research and development-intensive) and complexity of operations (number of segments) are significant characteristics of firms electing to concurrently disclose GAAP-compliant SCF and BS with earnings releases. Practical implications The findings discussed in this paper are of special interest to financial reporting policymakers, financial analysts, firm managers and stakeholders and academics. Originality/value The voluntary disclosure literature on quarterly earnings releases is extended by differentiating between GAAP-compliant and non-GAAP-compliant voluntary disclosers. The specific findings of this study may provide valuable input to policymakers as they study prevailing voluntary disclosure rules and practices.

scholarly journals China-U.S. Trade Frictions, Opinion Divergence, and Stock Volatilities

2021 ◽  
Vol 13 (6) ◽  
pp. 19
Author(s):  
Wenjia Zhang
Keyword(s):  
World Economy ◽  
Market Volatility ◽  
Mediation Effect ◽  
Chinese Stock Market ◽  
Economic Relation ◽  
Stock Volatility ◽  
The World ◽  
Before And After ◽  
Trade Frictions ◽  
Opinion Divergence

China-US economic relation is of particular significance to the world economy. This paper aims to investigate how trade frictions influence Chinese stock market volatilities. Overall, trade frictions significantly increase large stocks' volatilities, whereas influences the SMEs differently before and after the 301 investigation. For the big caps (SSE50), opinion divergence has a partial mediation effect between trade frictions and market volatilities. Trade frictions lead to higher opinion divergence, and opinion divergence reduces market volatility before the 301 investigation and increases market volatility in Stages IV and V. This result is robust after controlling the endogeneity of opinion divergence. For the small caps (SMEs), the mediation effect has not been founddetected, but opinion divergence significantly influences stock volatility, negative before the Section 301 investigation, whereas positive after that.

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