Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105397
Authors: 
Sadique, M. Shibley
Rahman, M. Arifur
Year of Publication: 
2013
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2084-0845 [Publisher:] Vizja Press & IT [Place:] Warsaw [Volume:] 7 [Year:] 2013 [Issue:] 3 [Pages:] 51-64
Abstract: 
We analyze the earnings information and stock prices of S&P500 firms and find that investors following S&P500 stocks (i) respond more to pro forma earnings than to GAAP earnings, (ii) respond to an emphasis on pro forma earnings, and (iii) are fixated on pro forma earnings. We provide the first direct evidence that a strategic emphasis on earnings numbers may affect return volatility. Further, our results do not support the argument that a larger investor response to Street earnings might be driven by large differences between the Street numbers and GAAP numbers.
Subjects: 
earnings press release
emphasis on earnings numbers
stock market reaction
functional fixation hypothesis
fourth quarter earnings
JEL: 
G11
G14
M41
Persistent Identifier of the first edition: 
Document Type: 
Article
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