Stock price reaction to earnings announcement: the case of an emerging market

Javed Iqbal and Faraz Farooqi

MPRA Paper from University Library of Munich, Germany

Abstract: In an efficient stock market stock prices instantaneously and accurately adjust to new information. This paper conducts an event study analysis on an emerging market namely the Karachi Stock Exchange (KSE) by investigating the stock price reaction to public announcement of quarterly after tax profit by listed firms. By employing 5 year data on stock prices from January 2004 to August 2008 for 114 non financial firms we found that there is no abnormal return post earnings announcement. Moreover the study provides evidence that there is a bigger element of surprise in bad news than in good news as the market reaction to bad news is stronger.

Keywords: Event Study; Earnings Announcement; Emerging Markets (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 2011-01-01, Revised 2011-05-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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