Open AccessBank Stock Returns And Quarterly Earnings: Price Responses To Imminent Earnings Announcements
Author(s) -
Thomas F. Gosnell,
Andrea J. Heuson,
Robert E. Lamy
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v11i2.5883
Subject(s) - earnings , earnings response coefficient , post earnings announcement drift , stock (firearms) , stock price , earnings per share , price–earnings ratio , economics , profit (economics) , monetary economics , quarter (canadian coin) , earnings before interest, taxes, depreciation, and amortization , business , accounting , mechanical engineering , paleontology , history , archaeology , series (stratigraphy) , engineering , biology , microeconomics
Numerous studies have documented that most of the stock price reaction to earnings announcements have occurred by the time the earnings information is made public. This study considers stock price reaction during the time period between the end of the accounting calendar when the forthcoming earnings information is ostensibly available to top management and the earnings release date to measure anticipatory price responses to imminent quarterly earnings announcements. Using bank stocks, the results indicate that portfolios composed of banks that eventually announce improved earnings show significant positive abnormal returns soon after the close of the accounting quarter while portfolios composed of banks that eventually publicize poor profit performance exhibit significant negative abnormal returns.