Abstract
This study investigates the effects of earnings announcements on stock prices in Boursa Kuwait, formerly known as the Kuwait Stock Exchange (KSE). The data spans the period 2018–2020, and both positive and negative earnings announcements are employed as shock events and their effects assessed. The study results show that there is a statistically abnormal rate of return before and after the earnings announcements and that most abnormal returns are just after the earnings announcement. This most likely indicates that Boursa Kuwait is a semi-strong efficient stock market. One important implication is an indication that insider-related trading might be absent in Boursa Kuwait.
Highlights
Whilst extensive studies of varying methodologies have been conducted in empirical finance in an attempt to draw correlation between stock prices and certain financial events; the results have been varied, inconclusive and at times controversial due to contrasting market systems and analysis methodologies
This study investigates the effects of earnings announcements on stock prices in Boursa Kuwait, formerly known as the Kuwait Stock Exchange (KSE)
In order to test the instantaneous effect of earnings announcement on stock prices, table 2 shows that it would not be possible for investors to experience superior risk-adjusted returns by investing after the announcement, especially given the normal transaction cost
Summary
Whilst extensive studies of varying methodologies have been conducted in empirical finance in an attempt to draw correlation between stock prices and certain financial events; the results have been varied, inconclusive and at times controversial due to contrasting market systems and analysis methodologies. This study looks to assess standard events and the effects of earnings announcement on listed stock on Boursa Kuwait. Abdmoulah (2010) employs an updated econometric technique to test the effects of government reform with in the Gulf Cooperation Council (GCC) countries. He finds, in the case of Kuwait, that there was poor evidence of weak-form efficiency; a possible indication of ineffective reform measures at the time
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