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Market reaction to banks’ interim press releases: an event study analysis

Valentina Lagasio and Marina Brogi

Journal of Management & Governance, 2021, vol. 25, issue 1, No 5, 95-119

Abstract: Abstract This study measures the effect of financial reporting on the prices and volumes traded of banks’ outstanding stocks around the disclosure of interim financial information, which is a critical issue in a bank strategy, its management and corporate governance as a whole. We investigate whether earning press releases are relevant for driving investor decisions by using a multi-model event study on a sample of 674 press releases disclosed during the period 2010–2017 from the 28 Global Systemically Important Banks (G-SIBs). Our results show a negative statistically significant impact on stock prices and trading volumes in the very next days following the publication date of a press release. This calls for a reflection on the need to regulate earnings press release contents and propose a standardized framework of disclosure. The study extends a multi-dimensional insight for various stakeholders and contributes to the ongoing debate of financial disclosure in banking institutions.

Keywords: Financial reporting; Disclosure; Banks; Event study (search for similar items in EconPapers)
JEL-codes: G1 G14 G20 G28 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10997-020-09516-y

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