Earnings Announcements and Competing Information

Posted: 18 Jan 2003


We investigate whether competing information, primarily analyst reports, reduces the usefulness of earnings announcements. Our examination of this issue has two parts. First, we examine whether investors' use of analyst reports, as measured by the absolute abnormal returns to these reports, substitutes for their use of earnings announcements. We find that market reactions to earnings announcements and analyst reports are positively related. This positive relation also characterizes subsequent period analyst reports relative to current period earnings announcements. Second, we test for changes in the absolute reactions to each type of disclosure over 1986-1995, and find that market reactions to both earnings announcements and analyst reports increased, in aggregate, over the sample period. As a whole, these results provide little or no empirical support for the view that the informativeness of earnings announcements is eroded by competing information in the form of analyst reports.

Keywords: capital market, earnings announcement, analyst report

JEL Classification: M41, G14, G29

Suggested Citation

Francis, Jennifer and Schipper, Katherine and Vincent, Linda, Earnings Announcements and Competing Information. Available at SSRN: https://ssrn.com/abstract=332061

Jennifer Francis (Contact Author)

Duke University ( email )

220 Allen Building
Durham, NC 27705
United States

Katherine Schipper

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Linda Vincent

Northwestern University ( email )

2001 Sheridan Road
Accounting & Information Systems
Evanston, IL 60208
United States
847-491-2659 (Phone)

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