 Do exogenous economic crises change investors’ response to earnings announcements?: A detailed review using the data from COVID-19 pandemicArati Kale and Devendra Kale The Journal of Economic Asymmetries, 2023, vol. 28, issue C Abstract: We investigate the impact of an exogenous economic crisis on investors' response to corporate earnings announcements. We use COVID-19 as an exogenous shock as an unanticipated macroeconomic event. Given the general fear and economic uncertainty, the COVID-19 pandemic provides a natural setting to investigate how investors reacted to earnings announcements. Did the investors excessively punish the stock for negative performance (since it confirmed their general fear), or did they reward good performers excessively since beating expectations was especially tough in the crisis? We find that the pandemic exacerbated investors' responses to earnings announcements. We further find that investors' reactions to significant positive earnings surprises were more prominent than to large negative ones. Our results are robust to alternate specifications and parallel trend analysis. We contribute to the literature by providing evidence on how the uncertainty caused by an economic crisis can impact investors’ response to earnings news. Keywords: ERC; Earnings surprise; COVID-19 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:28:y:2023:i:c:s1703494923000427 DOI: 10.1016/j.jeca.2023.e00330 Access Statistics for this article The Journal of Economic Asymmetries is currently edited by A.G. Malliaris More articles in The Journal of Economic Asymmetries from Elsevier |
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