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Industry Information Transfers: The Effect of Information Environment
Author(s) -
Graham Roger C.,
King Raymond D.
Publication year - 1996
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00080
Subject(s) - earnings , value (mathematics) , relevance (law) , business , economics , relation (database) , microeconomics , finance , database , machine learning , computer science , political science , law
This study extends the information environment theory of Atiase (1985) that suggests an inverse relation between the information available about a firm and the security price reaction to its release of earnings. Non‐announcing firms' security price responses are found to be inversely related to their market value but directly related to the number of peer firm articles appearing in the Wall Street Journal and the historical earnings correlations within their industry. The results suggest that information environment affects the security price relevance of a firm's own and its peer firms' earnings.