THE TRADING COSTS OF EARLY EARNINGS RELEASE: THE CASE OF HEWLETT-PACKARD COMPANY

Jeng-Hong Chen

Review of Business and Finance Studies, 2015, vol. 6, issue 3, 1-10

Abstract: Hewlett-Packard Company scheduled to announce its 2014 second quarter earnings after the market closed on May 22, 2014. However, its second quarter earnings report was accidently released earlier than scheduled. The lower than-expected revenue news dropped Hewlett-Packard’s stock price by 5% within 6 minutes. The rare occurrence of an early earnings announcement during trading hours provides an opportunity to investigate the influence of early earnings release on trading costs of market participants. The results show that Hewlett-Packard’s stock trading costs, measured by bid-ask spreads increased and its information asymmetry decreased after the early earnings release.

Keywords: Early Earnings Release; Trading Costs; Bid-Ask Spreads; Information Asymmetry (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 2015
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