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Market reaction to banks’ interim press releases: an event study analysis

Author

Listed:
  • Valentina Lagasio

    (Sapienza University of Rome)

  • Marina Brogi

    (Sapienza University of Rome)

Abstract

This study measures the effect of financial reporting on the prices and volumes traded of banks’ outstanding stocks around the disclosure of interim financial information, which is a critical issue in a bank strategy, its management and corporate governance as a whole. We investigate whether earning press releases are relevant for driving investor decisions by using a multi-model event study on a sample of 674 press releases disclosed during the period 2010–2017 from the 28 Global Systemically Important Banks (G-SIBs). Our results show a negative statistically significant impact on stock prices and trading volumes in the very next days following the publication date of a press release. This calls for a reflection on the need to regulate earnings press release contents and propose a standardized framework of disclosure. The study extends a multi-dimensional insight for various stakeholders and contributes to the ongoing debate of financial disclosure in banking institutions.

Suggested Citation

  • Valentina Lagasio & Marina Brogi, 2021. "Market reaction to banks’ interim press releases: an event study analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(1), pages 95-119, March.
    • Handle: RePEc:kap:jmgtgv:v:25:y:2021:i:1:d:10.1007_s10997-020-09516-y
    DOI: 10.1007/s10997-020-09516-y
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    More about this item

    Keywords

    Financial reporting; Disclosure; Banks; Event study;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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