Market reactions to repeat preannouncements

Abstract

Reviews the literature on earnings preannouncements (EPs) and investigates their use as a communication strategy and the difference in investor’s reactions to occasional, regular and one‐off EPs by using 1995‐1997 US data on 1,444 EPs. Finds that in general, market reactions to PSs is larger than to formal earnings announcements, that about half the EPs were one‐offs and that firms tended to release all of their bad news but only some of the good. Analyses abnormal returns to suggest that investors anticipate earnings surprises better for repeated EPs, although there is no evidence that firms using them repeatedly choose their amounts differently from one‐off announcers. Briefly considers consistency with other research and avenues for further research.

Citation

Soffer, L.C. (2001), "Market reactions to repeat preannouncements", Managerial Finance, Vol. 27 No. 12, pp. 40-56. https://doi.org/10.1108/03074350110767439