Use of Interim Earnings Information on the Helsinki Stock Exchange
27 Pages Posted: 11 Sep 2004
Date Written: August 2004
In this paper we study how the market uses the information on current and past interim earnings. Our hypothesis is that investors focus on a comparison of year-to-year changes in interim earnings. We provide further evidence on how the market acts in the face interim earnings announcements in an emerging market. The data is based on the Finnish market covering the years 1992-2002. We found, consistent with Ball and Bartov, evidence that investors underestimate the magnitude of the serial correlation in interim earnings. The results suggest that investors use, at least in part, a seasonal random walk model when forming earnings expectations.
Keywords: Anomalies, time series forecasts, emerging capital markets
JEL Classification: D23, D82, G18
Suggested Citation: Suggested Citation