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

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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

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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    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.
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    JEL classification:

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

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