Abstract
Contrary to prior research, the preannouncement of earnings before taxes, either good or bad, partially reduces the forecast error in the French Stock Market. Moreover, this study shows that the abnormal return at the formal announcement is negatively related to the dispersion of analysts’ forecasts after the preannouncement. It is positively related to the actual earnings surprise, especially for bad news. After controlling for the precision of the preannouncement and the actual earnings surprise, investors should buy stocks with negative (positive) abnormal return at the preannouncement of bad (good) news.
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