A Study on the Impact of Earning News on Investors’ Decision
17 Pages Posted: 22 May 2019
Date Written: December 16, 2018
The movement of the share price is always being the interesting topic for the researcher. The growing researches focus on the impact of bonus share announcement, stock split, right share, earning announcement, dividend announcement, and business announcement. There are more than 500 papers had published in known journals which confirmed that stock prices react to news (Kothari and Warner (2006). But they are failed to integrate the sentiment of the published earning specific news and its impact. Secondly, the studies which focused on long term, they failed to consider the potential problem of publication bias (Antweiler and Frank (2006). In this paper, the impact on investors’ decision is measured in terms of price reaction due to earning specific News. Total 369 earning specific news of 5 companies for 5 years were collected and analyzed. To check the impact of news, if any, the volume reactions were examined. The result indicates that there is an impact of news. Secondly, AAR and CAAR were tested and concluded that informed investors can earn abnormal high return. Lastly, the positive and negative sentiment of the news information was identified by using wordstat software. And it was concluded that there is no significant difference between AAR of positive earnings news and negative earnings news.
Keywords: Event study, Sentiment analysis, Market efficiency, AAR, CAAR
JEL Classification: G02
Suggested Citation: Suggested Citation