Market uncertainty, market sentiment, and the post-earnings announcement drift

Bird, Ron; Choi, Daniel F.S.; Yeung, Danny

doi:10.1007/s11156-013-0364-x

Cited by 33 publications

(13 citation statements)

References 37 publications

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“…1 Bird et al (2014) confirms the role of market sentiment in intensifying PEAD in the US markets and Kao (2007) provides evidence 1 The term is Greek equivalent of Wall Street in the US.…”

Section: Why Greece?mentioning

confidence: 83%

Post-Earnings Announcement Drift in Greece

Forbes

Giannopoulos²

2015

Rev. Pac. Basin Finan. Mark. Pol.

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This paper presents evidence regarding the post-earnings announcement drift (PEAD) anomaly for the Greek market in the years 2000-2006 (covering earnings announcements in the years [2001][2002][2003][2004][2005][2006][2007]. The impact of the introduction of International Financial Reporting Standards on the size and prevalence of the PEAD anomaly is examined. Unlike recent evidence for the US market we find PEAD to be alive and well, and of growing importance in our Greek sample. It may be the adoption of international financial reporting standards (IFRS) has served to reduce earnings predictability in Greece and thus enhance PEAD in the Athens stock exchange (ASE) market. This contrasts strongly with US evidence that the postearnings-announcement drift anomaly is now waning as more efficient markets and smarter, fundamentals-based, traders arbitrage its impact on stock prices.

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“…1 Bird et al (2014) confirms the role of market sentiment in intensifying PEAD in the US markets and Kao (2007) provides evidence 1 The term is Greek equivalent of Wall Street in the US.…”

Section: Why Greece?mentioning

confidence: 83%

Post-Earnings Announcement Drift in Greece

Forbes

Giannopoulos²

2015

Rev. Pac. Basin Finan. Mark. Pol.

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“…Several empirical studies found that the asymmetric response to earnings surprise is primarily caused by uncertainty, whether economy-wide or firm-specific (Bird and Yeung, 2012; Choi, 2014; Jiang et al, 2005; Williams, 2015; Zhang, 2006). Furthermore, it has been suggested that uncertainty is a major contributor to the persistence of the PEAD (Bird et al, 2014; Caskey, 2009; Francis et al, 2007; Gerard, 2012).…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…This study extends the previous literature by examining and comparing the role of the corporate governance mechanisms and prevailing market conditions in influencing investors’ initial and subsequent reactions to earnings announcements, with special attention to one of the most persistent market anomalies, namely the post-earnings announcement drift (PEAD). While several explanations for the PEAD based on the rational expectations model or some behavioural observations are provided in the literature (see Bartov et al, 2000; Mendenhall, 2004; Sadka, 2006), the prevailing market conditions such as market uncertainty and investor sentiment have received increasing attention in recent years as possible contributing factors to the PEAD (Bird and Yeung, 2012; Bird et al, 2014; Francis et al, 2007; Ozoguz, 2009; Williams, 2015). Although the relationship between governance and the initial reaction to earnings announcements was examined in several recent studies (e.g.…”

Section: Introductionmentioning

confidence: 99%

Corporate governance, market conditions and investors’ reaction to information signals

Almaskati¹,

Bird

Yeung

et al. 2022

Australian Journal of Management

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We examine and compare the extent to which the reaction of investors to earnings announcements is influenced by a firm’s governance profile and prevailing market conditions. We find that firms with better governance characteristics experience a larger initial reaction to both good and bad earnings announcements regardless of the prevailing sentiment and uncertainty conditions. However, the influence of governance is constrained to the announcement period. We demonstrate that changes in market uncertainty and/or investor sentiment are related to the post-earnings announcement drift. We also find that a major channel through which greater corporate governance influences the market response to unexpected earnings news is by lowering information uncertainty and so providing greater clarity of the implication of the news for firm value. Finally, we establish that two types of uncertainties (market and information) have very different influence on investor’s response to information signals. JEL Classification: D81, G10, G14, G30, G32

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“…The different information content of interim reporting leads to differences in investors' reaction triggered by inhomogeneous reports (Gajewski and Quéré, 2001). More recently, reactions to earnings announcements are found influenced mainly by market uncertainty and sentiment (Bird et al 2014), the quality of earnings (Ecker et al 2006) yet behavioral implications are still open to investigation (Luo, 2014).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The Information Content of Earnings Announcements in the European Insurance Market: An Event Study Analysis

Dreassi¹,

Kaucic²,

Valentinuz³

2017

EJBM

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We contribute to the extensive literature on the relationship between earnings announcements and market reactions by investigating the European insurance sector, which presents a wide difference in transparency between quarterly and semi-annual/annual reports. We design an event-study analysis comprising over 900 events in the period 2009-2016, testing if investors react differently to the two subsets of reports. We find that quarterly reports result in signals on stock prices' limited to few trading days, whereas semi-annual and annual reports produce bigger and more persistent impacts. Instead, we do not find evidence of differences impacting trading volumes. Our results are supportive of the recent EU decision to remove the obligation to publish quarterly reports to avoid short-termism and suggest that costs are greater than benefits for companies considering to adopt voluntary quarterly reports.

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Market uncertainty, market sentiment, and the post-earnings announcement drift

Cited by 33 publications

References 37 publications

Post-Earnings Announcement Drift in Greece

Post-Earnings Announcement Drift in Greece

Corporate governance, market conditions and investors’ reaction to information signals

The Information Content of Earnings Announcements in the European Insurance Market: An Event Study Analysis

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