Abstract
We investigate whether competing information, primarily analyst reports, reduces the usefulness of earnings announcements. Inconsistent with the view that information in analyst reports substitutes for earnings announcements, we find a positive relation between absolute abnormal returns to the two types of disclosures. This positive relation also characterizes subsequent period analyst reports relative to current period earnings announcements. We also find that aggregate absolute reactions to both types of disclosures increased over 1986-1995. As a whole, these results provide little support for the view that the informativeness of earnings announcements is eroded by competing information in the form of analyst reports.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 313-342 |
| Number of pages | 30 |
| Journal | Journal of Accounting and Economics |
| Volume | 33 |
| Issue number | 3 |
| DOIs | |
| State | Published - 2002 |
Funding
This research was supported by the Fuqua School of Business, Duke University, the Kellogg Graduate School of Management, Northwestern University, and the KPMG Foundation. The views expressed in this paper are those of the authors. Official positions of the Financial Accounting Standards Board are arrived at only after extensive due process and deliberation. We thank Lin Peng and Terry Quan for excellent research assistance. We appreciate comments from an anonymous referee and from Jerry Zimmerman (editor); from workshop participants at George Washington University, University of Arkansas, University of Colorado, University of Michigan, University of New South Wales, University of Southern California, participants at the AAA 2000 meetings; and from Bill Baber, Qi Chen, Patricia Dechow, S.P. Kothari, Russell Lundholm, Karen Pincus, Phil Shane and K.R. Subramanyam.
Keywords
- Analyst report
- Capital market
- Earnings announcement
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics