IDEAS home Printed from https://ideas.repec.org/a/ibf/rbfstu/v6y2015i3p1-10.html
   My bibliography  Save this article

The Trading Costs Of Early Earnings Release: The Case Of Hewlett-Packard Company

Author

Listed:
  • Jeng-Hong Chen

Abstract

Hewlett-Packard Company scheduled to announce its 2014 second quarter earnings after the market closed on May 22, 2014. However, its second quarter earnings report was accidently released earlier than scheduled. The lower than-expected revenue news dropped Hewlett-Packard’s stock price by 5% within 6 minutes. The rare occurrence of an early earnings announcement during trading hours provides an opportunity to investigate the influence of early earnings release on trading costs of market participants. The results show that Hewlett-Packard’s stock trading costs, measured by bid-ask spreads increased and its information asymmetry decreased after the early earnings release.

Suggested Citation

  • Jeng-Hong Chen, 2015. "The Trading Costs Of Early Earnings Release: The Case Of Hewlett-Packard Company," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 6(3), pages 1-10.
    • Handle: RePEc:ibf:rbfstu:v:6:y:2015:i:3:p:1-10
    as

    Download full text from publisher

    File URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v6n3-2015/RBFS-V6N3-2015-1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McInish, Thomas H & Wood, Robert A, 1992. "An Analysis of Intraday Patterns in Bid/Ask Spreads for NYSE Stocks," Journal of Finance, American Finance Association, vol. 47(2), pages 753-764, June.
    2. Jeng-Hong Chen, 2014. "Return Volatility Movements in Spot and Futures Markets: Evidence from Intraday Behavior of the S&P 500 Index," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(3), pages 95-107.
    3. Nilabhra Bhattacharya & Hemang Desai & Kumar Venkataraman, 2013. "Does Earnings Quality Affect Information Asymmetry? Evidence from Trading Costs," Contemporary Accounting Research, John Wiley & Sons, vol. 30(2), pages 482-516, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerhard, Frank & Hess, Dieter & Pohlmeier, Winfried, 1998. "What a Difference a Day Makes: On the Common Market Microstructure of Trading Days," CoFE Discussion Papers 98/01, University of Konstanz, Center of Finance and Econometrics (CoFE).
    2. Henry Bryant & Michael Haigh, 2004. "Bid-ask spreads in commodity futures markets," Applied Financial Economics, Taylor & Francis Journals, vol. 14(13), pages 923-936.
    3. R. Baupain & A. Durre, 2007. "The interday and intraday patterns of the overnight market : evidence from an electronic platform," Post-Print hal-00300195, HAL.
    4. Ascioglu, Asli & Comerton-Forde, Carole & McInish, Thomas H., 2010. "An examination of minimum tick sizes on the Tokyo Stock Exchange," Japan and the World Economy, Elsevier, vol. 22(1), pages 40-48, January.
    5. Bondarenko, Oleg, 2001. "Competing market makers, liquidity provision, and bid-ask spreads," Journal of Financial Markets, Elsevier, vol. 4(3), pages 269-308, June.
    6. Köksal, Bülent, 2012. "An Analysis of Intraday Patterns and Liquidity on the Istanbul Stock Exchange," MPRA Paper 35968, University Library of Munich, Germany.
    7. Malinova, Katya & Park, Andreas, 2014. "The impact of competition and information on intraday trading," Journal of Banking & Finance, Elsevier, vol. 44(C), pages 55-71.
    8. Hans Degryse & Frank Jong & Maarten Ravenswaaij & Gunther Wuyts, 2005. "Aggressive Orders and the Resiliency of a Limit Order Market," Review of Finance, Springer, vol. 9(2), pages 201-242, June.
    9. Ahmad Ibrahim Karajeh & Mohd Yussoff B. Ibrahim, 2017. "Impact of Audit Committee on the Association Between Financial Reporting Quality and Shareholder Value," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 14-19.
    10. Simone Brands & David R. Gallagher & Adrian Looi, 2006. "Active investment manager portfolios and preferences for stock characteristics," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(2), pages 169-190, June.
    11. Chung, Kee H. & Charoenwong, Charlie & Ding, David K., 2004. "Penny pricing and the components of spread and depth changes," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 2981-3007, December.
    12. Chung, Kee H. & Van Ness, Robert A., 2001. "Order handling rules, tick size, and the intraday pattern of bid-ask spreads for Nasdaq stocks," Journal of Financial Markets, Elsevier, vol. 4(2), pages 143-161, April.
    13. Chakravarty, Sugato & Harris, Fredreck H. deB. & Wood, Roger A., 2001. "Do Bid-Ask Spreads or Bid and Ask Depths Convey New Information First?," Purdue University Economics Working Papers 1149, Purdue University, Department of Economics.
    14. Chu, Quentin C. & Ding, David K. & Pyun, C. S., 1997. "The opening price behavior: Foreign exchange futures market versus equity market," International Review of Financial Analysis, Elsevier, vol. 6(1), pages 21-35.
    15. Dyhrberg, Anne H. & Foley, Sean & Svec, Jiri, 2018. "How investible is Bitcoin? Analyzing the liquidity and transaction costs of Bitcoin markets," Economics Letters, Elsevier, vol. 171(C), pages 140-143.
    16. Comerton-Forde, Carole & Tang, Kar Mei, 2009. "Anonymity, liquidity and fragmentation," Journal of Financial Markets, Elsevier, vol. 12(3), pages 337-367, August.
    17. Alexandros Gabrielsen & Massimiliano Marzo & Paolo Zagaglia, 2011. "Measuring market liquidity: An introductory survey," Papers 1112.6169, arXiv.org.
    18. Kee H. Chung & John Elder & Jang‐Chul Kim, 2013. "Liquidity and Information Flow around Monetary Policy Announcement," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(5), pages 781-820, August.
    19. Li, Shaoyu & Zhang, Teng & Li, Yingxiang, 2019. "Flight-to-liquidity: Evidence from China's stock market," Emerging Markets Review, Elsevier, vol. 38(C), pages 159-181.
    20. Min, Byoung-Kyu & Qiu, Buhui & Roh, Tai-Yong, 2022. "What drives the dispersion anomaly?," Journal of Banking & Finance, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Early Earnings Release; Trading Costs; Bid-Ask Spreads; Information Asymmetry;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibf:rbfstu:v:6:y:2015:i:3:p:1-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mercedes Jalbert (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.