Abstract
Prior studies have documented that management earnings forecasts which exceed expected earnings (good forecasts) are associated with significant positive abnormal stock returns, on average, when publicly released. However, no significant negative abnormal returns are observed immediately surrounding the release of management forecasts which are defined as bad news.' These findings conflict with the results to date on price reactions associated with earnings announcements. For example, Ball and Brown [1968] found that good news (bad news) annual earnings announcements are associated with positive (negative) abnormal returns in the months preceding and including the annual earnings announcement. Foster [1977] reported similar findings for quarterly earnings announcements. Beaver, Clarke, and Wright [1979] found a positive ordinal association between the magnitude of unexpected earnings (the difference between actual earnings and expected earnings)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
