THE INCREMENTAL INFORMATION CONTENT OF SALES IN EXPLAINING STOCK RETURNS: A CROSSINDUSTRY STUDY

Taewoo Park

The International Journal of Business and Finance Research, 2017, vol. 11, issue 1, 49-63

Abstract: In this paper we examine the industry specific determinants of the information content of sales incremental to earnings in explaining stock returns. We find that across industries the information content of sales beyond earnings in explaining contemporaneous return is significantly associated with the timeliness of earnings and sales information to the market. We find evidence of income smoothing which can arise from firms’ accounting and operating decisions. The increase in 2 R due to sales in explaining returns varies widely across industries and is with and due to adding sales in addition to earnings with mean 57% after controlling for the effects of the timeliness of sales and earnings

Keywords: Information Content; Stock Returns; Sales; Earnings (search for similar items in EconPapers)
JEL-codes: M21 M40 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:49-63

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