The Effect of Labor Strikes on Security Analysts' Forecast Superiority and on the Association between Risk-Adjusted Stock Returns and Unexpected Earnings
16 Pages Posted: 18 Apr 2008
This paper empirically examines whether labor strikes affect the forecasting and information content of quarterly earnings numbers. We address two issues regarding financial analyst forecast (FAF) superiority: whether FAF superiority increases when a strike occurs and if so, whether the increase in FAF superiority is sustained immediately after the strike ends. We also examine two issues regarding information content: whether strikes affect the coefficient mapping unexpected earnings into stock prices and whether strikes affect the variance of stock price changes. We suggest that strikes affect both the forecasting and information content of quarterly earnings numbers.
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