Getting bad news out early
Subtitle: does it really help stock prices?
By: Chris Downing and Steve Sharpe.
Contributors: Sharpe, Steven Alan.
Series: Finance and economics discussion series ;; 2003-58; Finance and economics discussion series (Online) ;; 2003-58.
Publisher: Federal Reserve Board
Published: 2003
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Stock price forecasting.
Description: "In this paper, we examine the stock price benefit of meeting or beating earnings expectations.  Using a general methodology, we find no evidence that the timing of earnings news has any benefit for firms' stock returns.  In fact, in many cases we find firms attempting to engineer positive earnings surprises by beating down expectations only to discover that their efforts are counterproductive.  Our results appear to overturn the findings of previous authors who, using less general methodologies, have suggested that firms can boost their stock returns by getting bad news out early.  Our results are robust across time periods, for different scaling factors on earnings revisions and surprises, when controlling for firm size and growth prospects, and when conditioned on past earnings news"--Federal Reserve Board web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 7/21/2004.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.