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The Information Content of Earnings Announcements: New Insights from Intertemporal and Cross-Sectional Behavior

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  • Beaver, William H.

    (Stanford University)

  • McNichols, Maureen

    (Stanford University)

  • Wang, Zach Z.

    (University of IL)

Abstract

This study examines the information content of quarterly earnings announcements. We first use a nonparametric approach to investigate whether quarterly earnings announcements are informative between 1971 and 2011 and find unequivocal evidence that earnings announcements convey significantly more information relative to non-announcement periods. We also find that the information content increases over time with a dramatic increase from 2001 onward, a period that includes the implementation of Sarbanes Oxley reforms and the worst economic downturn since the Great Depression. We then investigate cross-sectional variation in information content. We find that the information content of earnings announcements is positively associated with profitability, firm size and analyst coverage.

Suggested Citation

  • Beaver, William H. & McNichols, Maureen & Wang, Zach Z., 2015. "The Information Content of Earnings Announcements: New Insights from Intertemporal and Cross-Sectional Behavior," Research Papers 3338, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3338
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