Are Earnings Predictable? Evidence from Equity Issues and Buyback Announcements

38 Pages Posted: 6 Apr 2015 Last revised: 13 Jul 2020

Date Written: June 10, 2020


We find that earnings announcements that follow equity issues and buyback announcements have predictable market reactions. Four-factor abnormal returns to earnings following buyback announcements are higher by 5.1% than similar returns to earnings following equity issues over the (-1,+30) window; the difference is 2.2% when unadjusted returns are used. The evidence is consistent with the notion that markets do not fully reflect information that is embedded in voluntary corporate actions. The drift in these returns is unrelated and distinct from the post-earnings announcement drift. For example, we find positive drift for firms making buyback announcements even when they exhibit negative earnings surprises and find negative drift for firms issuing equity even when they show positive earnings surprises. Since the study looks at short periods around earnings announcements, it does not suffer from benchmarking errors that may influence long-horizon returns.

Keywords: Earnings Predictability, Repurchases/Buybacks, Equity Issues, SEOs, Information Asymmetry, Market Efficiency

JEL Classification: G14, G32, G35

Suggested Citation

Amini, Shahram and Singal, Vijay, Are Earnings Predictable? Evidence from Equity Issues and Buyback Announcements (June 10, 2020). Available at SSRN: or

Shahram Amini (Contact Author)

University of Denver ( email )

2101 S. University Blvd
Denver, CO 80208
United States

HOME PAGE: http://

Vijay Singal

Virginia Tech ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States
5402317750 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics