Title: The Effects of Earnings and Firm Characteristics on Differential Interpretation of Earnings Announcements
Abstract: This study examines whether differential interpretation of earnings announcements is affected by earnings and firm characteristics. We find that Kandel and Pearson's (1995) forecast measures of differential interpretation are: 1) negatively related to earnings predictability, firm size, and price-to-book ratio, and 2) positively related to earnings surprise, negative earnings, and analyst coverage. This evidence suggests that differential interpretation of earnings announcements is decreasing in the quality of the earnings, the quality of pre-announcement disclosure, and the cost of analyzing a firm's value.
Publication Year: 2007
Publication Date: 2007-01-01
Language: en
Type: article
Indexed In: ['crossref']
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