On the Market Reaction to Revenue and Earnings Surprises

Itay Kama

Journal of Business Finance & Accounting, 2009, vol. 36, issue 1‐2, 31-50

Abstract: Abstract: This study extends Ertimur et al. (2003) and Jegadeesh and Livnat (2006a) by providing a contextual framework for the information content of revenue and earnings surprises. I find that the influence of earnings surprises (revenue surprises) on stock returns is lower (higher) in R&D intensive companies. Also, market reaction to earnings surprises is lower in the fourth quarter, and to revenue surprises it is higher in industries with oligopolistic competition. A comprehensive analysis indicates that, in contrast to previous studies for the full sample, in several contexts market reaction to earnings surprises is not higher than to revenue surprises.

Date: 2009
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https://doi.org/10.1111/j.1468-5957.2008.02121.x

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