Firm Complexity and Post-Earnings-Announcement Drift

Alexander Barinov, Shawn Saeyeul Park and Celim Yildizhan

MPRA Paper from University Library of Munich, Germany

Abstract: The paper shows that the post earnings announcement drift is stronger for conglomerates, despite conglomerates being larger, more liquid, and more actively researched by investors. We attribute this finding to slower information processing about complex firms and show that the post earnings announcement drift is positively related to measures of conglomerate complexity. We also find that the post earnings announcement drift is stronger for new conglomerates than it is for existing conglomerates and that investors are most confused about complicated firms that expand from within rather than firms that diversify into new business segments via mergers and acquisitions.

Keywords: post-earnings-announcement drift; conglomerates; mispricing; limits to arbitrage; complicated firms (search for similar items in EconPapers)
JEL-codes: D83 G12 G14 M40 (search for similar items in EconPapers)
Date: 2014-01-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://mpra.ub.uni-muenchen.de/53887/1/MPRA_paper_53887.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/53942/1/MPRA_paper_53887.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/71015/4/MPRA_paper_71015.pdf revised version (application/pdf)

Related works:
Journal Article: Firm complexity and post-earnings announcement drift (2024)
Working Paper: Firm Complexity and Post-Earnings-Announcement Drift (2018)
Working Paper: Firm Complexity and Post-Earnings-Announcement Drift (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:53887

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