Stock Performance Subsequent to Combinations in Quarterly Revenue Surprise, Earnings Surprise, Guidance, Valuation, and Report Time
Journal of Economics and Finance, 2020, DOI 10.1007/s12197-020-09531-7
30 Pages Posted: 15 Jun 2019 Last revised: 5 Oct 2020
Date Written: June 3, 2019
Finance literature highlights various reasons for stock performance subsequent to earnings announcements. However, other moving parts in these scenarios must also be simultaneously specified. While both revenue and earnings surprises are important for determining stock performance, forward-looking guidance and firm valuation prior to earnings should also be considered. Additionally, analyses that solely consider market-level data miss important subtleties evident in a sector-specific study, as “normal” growth and valuation metrics across sectors widely differ. We differentiate between firms that announce earnings during the evening hours (after the close) and firms that announce earnings during the morning hours (prior to the open).
Keywords: Quarterly expectations, Analyst consensus, Guidance, Trading strategy
JEL Classification: G11, G12, G14, G17
Suggested Citation: Suggested Citation