Public Predisclosure Information, Firm Size, Analyst Following, and Market Reactions to Earnings Announcements

2003 ◽  
Author(s):  
Theodore E. Christensen ◽  
Toni Q. Smith ◽  
Pamela S. Stuerke
Keyword(s):  
Firm Size ◽  
Earnings Announcements ◽  
Market Reactions ◽  
Analyst Following ◽  
Predisclosure Information

scholarly journals The Effect of Managerial Ability and Tone of Earnings Announcements towards Market Reactions

2020 ◽  
Vol 22 (1) ◽  
pp. 10-17
Author(s):  
Zaenal Fanani ◽  
Zakiyyah Riris Merbaka
Keyword(s):  
Firm Size ◽  
Sampling Method ◽  
Stock Exchange ◽  
Earnings Announcements ◽  
Manufacturing Companies ◽  
Managerial Ability ◽  
Control Variables ◽  
Market Reactions ◽  
Purposive Sampling ◽  
Study Population

This study aims to examine and analyse the effect of Managerial Ability, Tone of Earnings Announcements, and Market Reactions. Using Return on Asset and Firm Size as control variables. In this study population taken is manufacturing companies that are listed on the Indonesia Stock Exchange during the year 2015-2016. Based on the population criteria set, the sampling method is purposive sampling. The sa

Does Accounting Conservatism Mitigate the Shortcomings of CEO Overconfidence?

2017 ◽  
Vol 92 (6) ◽  
pp. 77-101 ◽  
Author(s):  
Charles Hsu ◽  
Kirill E. Novoselov ◽  
Rencheng Wang
Keyword(s):  
Cash Flow ◽  
Accounting Conservatism ◽  
Bad News ◽  
Market Reactions ◽  
Analyst Following ◽  
Investment Projects ◽  
Conservative Accounting ◽  
Theoretical Predictions ◽  
Empirical Tests ◽  
Positive Effect

ABSTRACT Overconfident CEOs are more willing to initiate investment projects that require experimentation, yet tend to defer responding to the bad news when the project is not performing as planned. Accounting conservatism accelerates the recognition of the bad news and its dissemination to gatekeepers, making it more likely that the CEO will acknowledge the problem earlier and start searching for solutions. Therefore, firms where both characteristics—CEO overconfidence and accounting conservatism—are present should perform better. Our empirical tests confirm this prediction: firms that practice conservative accounting and are run by overconfident CEOs exhibit better cash flow performance. Our results continue to hold in a variety of settings, including market reactions to acquisitions, cash flow downside risk, and analyst following. Further, the joint positive effect of CEO overconfidence and accounting conservatism on firm performance is stronger in high-uncertainty environments and in firms facing less stringent financing constraints, consistent with theoretical predictions.

Equal opportunity market

2019 ◽  
Vol 18 (3) ◽  
pp. 508-531
Author(s):  
Jennifer Bannister ◽  
Li-Chin Jennifer Ho ◽  
Xiaoxiao Song
Keyword(s):  
Stock Returns ◽  
Market Reaction ◽  
Information Environment ◽  
Market Model ◽  
Foreign Firms ◽  
Market Reactions ◽  
Analyst Following ◽  
Distance Information ◽  
Content Type ◽  
Domestic Firms

Purpose This paper aims to compare US market reactions to the restatement announcements of foreign firms listed in the USA and those of US firms by applying the Capital Market Liability of Foreignness (CMLOF) concept. It further investigates the incremental effect of an improved information environment, proxied by analyst following, on mitigating the negative market reaction to a restatement for foreign vs domestic firms. Design/methodology/approach Regression tests are performed on a matched-sample, which matches foreign and domestic firms based on industry and firm size. Market reaction is defined as three-day abnormal stock returns calculated using a market model. The sources of CMLOF are defined as institutional distance, information costs, unfamiliarity costs and cultural distance. Findings Results suggest that, on average, the magnitude of the market reaction to a restatement is 1.8 per cent lower for foreign firms than for domestic firms. Information and unfamiliarity costs contribute to the differing market reactions. In addition, it appears that the improved information environment created by a higher analyst following is more important for foreign firms who face CMLOF than for domestic firms. Originality/value While prior research establishes a negative market reaction to restatement announcements, comparing the market reactions for foreign and domestic firms provides evidence regarding whether US investors treat foreign and domestic firms differently. Additionally, to the best of the authors’ knowledge, this is the first study that examines CMLOF using restatement announcements.

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