Smoothness, Earnings Surprise and Stock Price Informativeness. Evidence from Indian Stock Market

Gregory D. Lyimo ()

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2014, vol. 4, issue 2, 385-394

Abstract: We examine the relationship between stock price synchronicity and earnings quality. We specifically used earning surprise and smoothness as proxy of earnings quality. Data were collected from companies listed in Bombay stock exchange in BSE 500. Our sample period ranges from 2006 to 2012. We employed panel data regression model using pooled OLS with standard error robust. We find that there is significant negative relationship between earnings surprise and stock price synchronicity. This finding is indicates that earnings surprise improves stock price informativeness. Finally, we find that there is no significance relationship between smoothness and stock price synchronicity. Therefore, smoothness of earnings does not influence stock price informativeness. The present study adds to new insight of the relationship between stock price informativeness and earnings quality proxies from emerging market particular India.

Keywords: Earnings quality; earnings surprise; stock price synchronicity; stock price informativeness (search for similar items in EconPapers)
Date: 2014
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