Earnings Attribution and Information Transfers
David S. Koo
University of Georgia - J. M. Tull School of Accounting
Juan (Julie) Wu
University of Georgia
P. Eric Yeung
Cornell University - Samuel Curtis Johnson Graduate School of Management
January 1, 2013
Management frequently attributes earnings news to various economic events. Using textual analysis, we identify the economic factors underlying earnings news from press releases. We find that earnings news in management forecasts is attributed to a wide range of industry-wide shocks and firm-specific actions. As expected, earnings attributions significantly affect peer firms’ price reactions to the earnings news. Specifically, earnings news attributed to industry-wide trends or firm structural changes leads to positive information transfers but news attributed to firm competitive moves triggers negative information transfers. The strength of information transfers depends on firm-level rivalry within the industry, the nature of industry-level competition, and the credibility of earnings attributions.
Number of Pages in PDF File: 47
Keywords: Earnings Attributions, Information Transfers, Management Forecasts, Textual Analysis
JEL Classification: G14, M41working papers series
Date posted: November 20, 2010 ; Last revised: January 16, 2013
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